Buy what you know, goes the old investing mantra.And I think I knowSmith & Nephew (LSE: SN), which makes surgical implants, reasonably well. Iveworked in that business in the past, and I know how widely used and well regarded are its products they really are among the best.
Im currently eyeing up possibilities for my next SIPP investment, and the 6% share price spike atSmith & Nephew on Thursday drew my attention. Its a response to the latest trading update, which reported a 3% rise in third-quarter underlying revenue.
Chief executiveNamal Nawana cited US and Emerging Marketsgrowth as driving the overall improvement, with underlying US revenue up 4% and Emerging Markets revenue surging by 10%.
That sounds like really good news, as uncertain US markets have been contributing to the companys share price volatility all year.
New markets
The firm also reported strong growth in Reconstruction, Sports Medicine Joint Repair and Advanced Wound Devices, which are potentially lucrative markets.
Smith & Nephew does appear to be doing well at refocusing the way it does business, with Nawana adding: These results were achieved while successfully redesigning how we will run the company. There is still more to do, and I am pleased with the pace of progress and engagement across the organisation.
Smith & Nephews dividend yields arent great, with forecasts a little above the 2% mark. But they should be well covered by earnings and are progressive and a sustainable and rising divided can be better than a big yield today.
I want to see how well the new strategy progresses, butSmith & Nephew is definitely on my shortlist.
Growth share dip
Ive also had my eye onNMC Health (LSE: NMC) for some time, though the share price chart has started to look scarily like some of the growth bubbles weve seen in the past few years. And Ive been fearing it might go pop.
But from a peak of 4,376p in August, the price has shed 20% to drop to 3,508p as I write, so are we looking at an unexpected buying opportunity?
First-half figures in August were impressive, but actually proved to be pivotal for the share price, which went into a two-month slide. Were investors hoping for even better results? Its hard to tell, but its quite common for growth investors to be expecting spectacular results when all they actually get is seriously good ones and theyll often run for the hills when that happens.
Upgraded guidance
But NMC revised its guidance upwards a week ago, and that could well have given fresh life to the share price and were seeing it moving upwards again. After a strong first half, the firm now expects a 24% rise in revenue for the full year, and has lifted EBITDA guidance from $465m to $480m.
The shares are currently priced at 25 times forecast 2019 earnings per share, which definitely requires solid growth to justify. But predictions suggest 30% EPS rises this year and next, and were looking at an attractive PEG ratio of only 0.8.
I still see NMC as a strong growth candidate, with a likelihood of turning into a big-dividend cash cow in the future.
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