Chasing Value: Intuitive Surgical Is Not a Bargain, but It's Close

It is rare for me to advise caution about ISRG, because it still has a basic monopoly in the area of robotic surgery, and is expanding globally with plenty of room to run, all the time extending its revenue for services and replacement parts. However it has been way too pricey for the last six months.

The stock still trades at a high P/E ratio around 34, but it is moving downward with increased earnings having a forward P/E projected around 29. On a relative basis this is twice the market average but inline with its growth rate, as evidenced by its eye catch PEG ratio of 1.18. These factors are something ISRG has in common with the market darling I wrote about earlier today,
Chasing Value: Apple Falling, Opportunity Calling .

Like Apple Inc. (AAPL,) Intuitive has no debt, a growing cash stash, high returns on equity and profit margins and the outlook seems positive for the foreseeable future. Like Apple this stock belongs on your watch list. Perhaps this might be a time to establish a position in the stock. I would not jump in with both feet. Just stick a toe in the investment waters and perhaps dollar cost average a few shares at a time. This strategy can prove very rewarding if you have a no transaction fee or a low fee brokerage account.

Sheldon Liber is the CEO of a small private investment company and the principal for design and research at an architecture and planning firm. He writes the columns Chasing Value™ and Serious Money. Disclosure: He owns shares or ISRG.