SYK v.s. IHI

I use the time spent actively ignoring the bear market rallies such as the one we're in now to study companies in depth for possible entry positions during the inevitable pullbacks.

Stryker SYK, a wide moat high quality medical device company, has caught my attention as it comes off of 52 week lows. Strong management, a bullet-proof balance sheet and great free cash flow growth certainly makes it attractive. Even in the current environment, SYK has increased its modest dividend by 20% (effortlessly sustained with a miserly 12% payout ratio). I'm still doing my due digilence on this one and fortunately, it's well within my circle of competence.

iShares Dow Jones Medical Device ETF IHI is also very interesting. It's a concentrated ETF with the top 10 out of 43 companies making up about 80% of the holdings. It's trading at about 40% discount to Morningstar's fair market value and I'm quite familiar with the most highly weighted companies 2/3rds of which are wide to narrow moat entities. Great FCF mean values, very tax efficient (no capital gains distributions since inception) and diversification of litigation risk (one of the major downsides of investing in this group) make this ETF quite compelling.

enjoy your research.... I do. :-)