Daily Stock Pick for June 13, 2023

Arguably the most useful function of AI is its ability to process humongous amounts of data and turn it into actionable information.

And here’s the important bit – this data doesn’t need to be  in the form of letters and numbers that’s already been organized on databases.

How about scans and images, the primary diagnostic mechanism of the medical industry? The standard practice that comes to mind is a doctor squinting at a scan and delivering a diagnosis.

But what if an advanced AI algorithm could interpret that scan just as well – or even better – than a doctor, and deliver an accurate diagnosis and plan of action?

That’s the power of AI in medicine.

And today’s stock has been actively harnessing that power to drive value in their business and position it for long-term success.

The stock is also down almost 40% from its all-time highs with a massive disparity between its forward and trailing P/E, giving investors a chance to pick it up at a good price.

Medtronic plc (MDT)

Healthtech leader Medtronic has an extensive range of products in a wide range of areas from general surgery and patient monitoring to neurological devices and cardiac rhythms. It’s far too much to describe here, but suffice to say they’re very well diversified across the medical device field.

The company’s recent financial results were upbeat. However, its shares fell sharply following the announcement due to lower guidance for the next fiscal year. 

And that’s now an opportunity – on a forward price-to-earnings basis, Medtronic is now trading at 16.5x, compared to its trailing price-to-earnings ratio of almost 30x. 

This is a huge disparity that may quickly narrow as the market fully absorbs the longer-term potential of Medtronic due to AI (should forward P/E increase, that means Medtronic’s share price would increase as well).

Medtronic has been a fervent adopter of AI, believing that is the key to personalized medicine (which is also the future of medicine).

The company’s AccuRhythm AI technology recently picked up a medtech breakthrough award. It’s also signed a deal with NVIDIA to scale up its GI Genius endoscopy tool, which uses AI to detect precancerous tissue.

In sum, Medtronic’s recent price decline has created an attractive window to scoop up some shares. And with the winds of AI at its back, that could be a very good deal indeed.

To your wealth,
Felix @ Ace of Investing