It's now or never with Covidien

Meanwhile, COV's cost controls remain good, and the company should receive a modest tailwind from lower material costs, offset slightly by a net-negative foreign exchange variable. The First Call FY2010/FY2011 EPS estimates for COV are $3.29 to $3.66.

To be sure, there is risk with Covidien: margins may be pressured as health care providers seek further cost cuts, on the heels of the U.S. government doing the same via health care reform. But a market that could increase by up to 40-45 million regular patients tips the scale easily in favor of the Buy.

Technically, Covidien's stock chart is solid: an uptrend, with minor, corrective pull-backs, and the stock continually stays above the 50-day moving average, an indication that institutional investors (IIs) are establishing/adding to their COV positions. There will be psychological resistance at $50, but this should prove to be minor. Covidien is headed north.

Stock Analysis: Covidien Ltd. is a moderate-risk stock. If you've already purchased the company's shares, hold them. If not, consider buying a 25% position in COV now; then buy another 25% in one month, if U.S. and global economic conditions don't worsen substantially. Under any circumstance, don't buy more than 75% of your COV position before February 2010. Sell/Stop Loss if you were to buy shares in this company: $17.

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Disclosure: Lazzaro has no positions in stocks, but does own shares in two Pimco Bond Funds: PHDAX and PYMAX.