BY Dennis Hobein:

Contributor, Stock Traders Daily

Real Time Trading Reports:  Included are detailed trading reports designed to help investors realize opportunities in these companies.  The reports are linked to the stock symbols in the article below.

 Performance - Click Here

(La Jolla, CA)  Some of the world’s largest medical equipment and instrument stocks have been left behind during the broader markets’ rally this year. The Diamonds Trust (NYSE: DIA) – which correlates to the performance of the Dow Jones Industrial Average – is up about 20% so far this year, but there are plenty of well-known, large-cap stocks in this industry that don’t come close to that performance. Of course, the most prevalent overhang on the sector is the impending reform of health care. This issue was highlighted on Boston Scientifics’ (NYSE: BSX) third quarter conference call on Oct. 20^th, when its management stated, “U.S. healthcare reform is still being intensely debated, and if a medical device innovation tax is passed together with the utilization tax that is proposed to be levied on our customers, changes in the way healthcare is developed and delivered will place added strains on healthcare providers, technology investments and advancements as well as suppliers.” That stock is up about 9% this year.

Reform Concern May Be Overdone; Fundamentals Solid

The uncertainty regarding healthcare reform is a valid headwind for these stocks, but some sell-side analysts have been questioning in recent weeks whether that worry is overdone. Essentially, they do not believe that reform will result in a dramatic change to their business models, or that hospital spending patterns will be permanently shifted. Additionally, the recent earnings reports from medical equipment makers suggest that business has been solid. The clearest example came from Medtronic (NYSE: MDT), which reported strong quarterly results that topped the Streets’ EPS and revenue estimates, and also issued upside fiscal year 2010 guidance. Shares have reacted very positively this morning, currently up 6% on the day. MDT’s impressive report has also boosted the shares of its close competitor, St. Jude (NYSE:STJ). STJ is another stock in the sector that has done virtually nothing this year -- it was up 6% year-to-date prior to today. Looking at its earnings history this year, it is a bit difficult to understand why. It has either met or beat its bottom-line expectations in each quarter, and its revenue has grown in each quarter. Since the stock has treaded water, its valuation is on the cheap side with a 1-year forward P/E of 13.4x. For a better technical perspective on these stocks, please click on the tickers symbols to review our free trading reports. These offer essential risk mitigation tools that many traders find invaluable.

Intuitive Surgical A Stock That Offers High Growth Potential

For those interested in a “high-risk, high-reward” name, Intuitive Surgical (Nasdaq: ISRG) may fit the bill. This company makes the world-renowned “da Vinci Surgical System”. This is robotic, medical equipment that performs many types of surgery using a more non-invasive approach that allows patients to recover quicker, with less pain. Intuitive Surgical’s growth was phenomenal during the 2004-2007 period, but stalled out during the recession. However, as the economy begins to take steps forward and as hospitals loosen up their budgets, ISRG stands to greatly benefit because its product is a “game changer” in the field. The company also recently announced that its da Vinci System gained approval in Japan, opening up a large international opportunity. Its shares have already made a massive move higher this year, so investors interested in entering an ISRG trade are strongly encouraged to read our free trading report on this stock first.