DJ Orthopedics Inc., a medical device company is traded on NYSE under the symbol of DJO and in my opinion currently it is a BUY.
DJ Orthopedics Inc. specializes in non-operative orthopedic, spine and vascular products in the United States and in more than 60 other countries worldwide. DJO offers approximately 600 rehabilitation products that include rigid knee braces, soft goods and pain management products that are used to prevent injury, treat chronic conditions and aid in post-surgery/post-injury recovery.
Fundamentally, DJ Orthopedic Inc. has had a good growth story in 2006. In the quarter ending September 30, 2006, DJO Inc. reported a 56.9% increase in net revenues and 48.7% increase in the gross profit compared to Q3 2005. The company is also very committed in introducing new products in the market - DJO introduced 16 new products in the market in the first nine months of 2006.
I like DJO not only because of its dominance in the non-operative orthopedic segment of the healthcare industry, but also because of the current demographic trend in its favor. With the baby boomers reaching sixties and expecting to live longer, I see a growing demand for its product line lasting many decades.
One thing favoring DJ Orthopedics is its greater insulation to seasonal revenue patterns compared to its competitors who are in the business of operative surgical products. People suffering from orthopedic injuries are usually less inclined to go through a corrective surgery right away, and tend to opt for non-operative rehabilitation products as an intermediate measure. This is especially true during certain times of the year, e.g. the holiday season, when these non-operative rehabilitation products become all the more prevalent due to the desire to postpone the inconvenience of a surgery. In addition, more and more people indulging in outdoor activities (such as skiing, football, etc.) are also now routinely and proactively using injury preventing knee braces. These factors make the entire range of DJO products prevalent year round.
One more thing worth mentioning is the possibility of a short squeeze. Currently, many traders are betting against DJO, thus shorting approximately 7.4% of the total number of shares available for trading. The short ratio for DJO as of January 9th, 2007 was 12.1, which means that it will take approximately 12 days for the shorts to cover their sales. In my opinion any positive indication in favor of DJ Orthopedics will pressure shorts and if they all start covering their calls at the same time, we will witness a short-squeeze.
Bottom line, current demographic trend and growing market presence make DJO lucrative. So investors BUY DJO and play the trend, in my opinion it will make you greener.
DJ Orthopedics Inc. specializes in non-operative orthopedic, spine and vascular products in the United States and in more than 60 other countries worldwide. DJO offers approximately 600 rehabilitation products that include rigid knee braces, soft goods and pain management products that are used to prevent injury, treat chronic conditions and aid in post-surgery/post-injury recovery.
Fundamentally, DJ Orthopedic Inc. has had a good growth story in 2006. In the quarter ending September 30, 2006, DJO Inc. reported a 56.9% increase in net revenues and 48.7% increase in the gross profit compared to Q3 2005. The company is also very committed in introducing new products in the market - DJO introduced 16 new products in the market in the first nine months of 2006.
I like DJO not only because of its dominance in the non-operative orthopedic segment of the healthcare industry, but also because of the current demographic trend in its favor. With the baby boomers reaching sixties and expecting to live longer, I see a growing demand for its product line lasting many decades.
One thing favoring DJ Orthopedics is its greater insulation to seasonal revenue patterns compared to its competitors who are in the business of operative surgical products. People suffering from orthopedic injuries are usually less inclined to go through a corrective surgery right away, and tend to opt for non-operative rehabilitation products as an intermediate measure. This is especially true during certain times of the year, e.g. the holiday season, when these non-operative rehabilitation products become all the more prevalent due to the desire to postpone the inconvenience of a surgery. In addition, more and more people indulging in outdoor activities (such as skiing, football, etc.) are also now routinely and proactively using injury preventing knee braces. These factors make the entire range of DJO products prevalent year round.
One more thing worth mentioning is the possibility of a short squeeze. Currently, many traders are betting against DJO, thus shorting approximately 7.4% of the total number of shares available for trading. The short ratio for DJO as of January 9th, 2007 was 12.1, which means that it will take approximately 12 days for the shorts to cover their sales. In my opinion any positive indication in favor of DJ Orthopedics will pressure shorts and if they all start covering their calls at the same time, we will witness a short-squeeze.
Bottom line, current demographic trend and growing market presence make DJO lucrative. So investors BUY DJO and play the trend, in my opinion it will make you greener.
2 comments:
I liked your outlook on the short squeeze.
Wats your opinion on Sirius-XM merger?
Honestly, after I learned that both SIRI and XMSR have huge losses, -ve EPS and no PE, I did not bother to look deeper. But with their merger I can see more variety of programs and possibly lower fees. BTW, what are they calling the new company.
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