Going Under the Knife or Not
The latest spam from the Oxford Club peaked my interest this morning. I decided to track down the spruiked company which I initially thought was Accuray (ARAY). I was getting close when I stumbled on this article by Stock Gumshoe, Travis Johnson. Doh! The thrill of the hunt was gone, Travis identified Varian Medical Systems, Inc. (Public, NYSE:VAR)
Still when I glanced at Varian’s chart I thought all may not be lost. Consistent earnings growth combined with falling P/E ratio is a combination that peaks my interest.
The Oxford Club’s hyperbole aside and totally discounting the cargo screening possibilities, Varian Medical’s core life saving products appear set to deliver growth for at least a few more years. However, contrary to the Oxford Club’s claims, Varian Medical face competition from both small and large competitors.
Varian’s profits dipped in 2007 due to falling margins, but have since resumed growing. VAR has a cash flush balance sheet, excellent margins and ROE and appears to be a good medium to long term opportunity worth having a closer look at.
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I, too, was interested in discovering what company the Oxford Club letter was referring to. My first guess was Electa AB of Sweden and the price graph for 2009 looks great (more than doubling since February. However, I could not get any connection between them and airport baggage screening. So, I Googled the words Electa Oxford Club and found a reference to Varian (VAR). Then I was able to also see the link to Stock Gumshoe and kicked myself for not looking there first, since he apparently has a favorite bone to pick with them.
Given Electa AB’s solid appreciation, I’m going to watch that for a while. Chances are that if the legal “contesting” in Sweden was brought on by them against Varian, then they stand to get a hit downwards if the decision goes in favor of Varian.
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