5 Stocks To Gain From Medical Device Excise Tax Exemption

It has been seen, small device companies are often funded by venture capital. When unable to raise prices, find a suitable partner for merger or even produce profit at times, the 2.3% tax had affected critical operating funds. In such a scenario, the first response of such companies had been slashing jobs in a bid to save costs.

As per a report published in AdvaMed, this tax resulted in employment reductions of 14,000 industry workers in 2013 and the years prior to the implementation of the tax, with approximately an additional 4,500 jobs lost in 2014. Not much needs to be said about the adverse impact this may have already created on the U.S. economy as a whole.

Accordingly, as a much-needed breather for MedTech industry, with the tax finally being suspended for two years, stakeholders in the industry warmly welcomed this legislative move, particularly those with stakes in the small-cap medical device companies.

Time Is Ripe: Take Your Pick

Given this backdrop, we hereby select 5 small-cap MedTech stocks (< $1 billion) that have been performing well since the suspension of the medical device tax and are expected to retain its momentum in the days ahead.

The criteria of selection is our proprietary Zacks Rank scenario – stocks that carry a favorable Zacks Rank #1 (Strong Buy) or 2 (Buy) and have witnessed a price rise of more than 5% in the past 12 weeks. The stocks chosen by us also exhibit strong fundamentals that make them lucrative investing units over the near as well as the long term.

CryoLife Inc. (CRY - Snapshot Report): Georgia-based CryoLife engages in the processing and distribution of cryogenically preserved implantable human tissues, which are used for cardiac and vascular transplantations. This Zacks Rank #1 company currently holds a market cap of $356.74 million and has witnessed a 5.43% rise in its share price in the past 12 weeks.

While the company’s current earnings yield is 2.59%, far better than the industry average of -0.91%; its projected sales growth for the current year is 22.41% compared to the industry average of 8.27%. Over the long term, CryoLife’s expected EPS growth rate is pegged at 4%.

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