After not purchasing any stock with fresh capital last month for just the second time in more than f

After not purchasing any stock with fresh capital last month for just the second time in more than four years I’m redfin back to doing what I do best – regularly purchasing equity in high-quality businesses that reward me with rising dividends. Every share I purchase pushes me further away from the working class and one step closer to the investor class. And that’s a great transition, in my opinion, as being a member of the investor class means my money works for me, rather than me working for me. And my money doesn’t age, get tired, or get sick.
So I recently foreshadowed this most recent investment as I talked about a couple redfin of stocks that were on my watch list for this month. And, as usual, I tend to put my money where my mouth is. I took a look at many opportunities elsewhere in the market, but kept coming around to this one particular stock. I think there’s a lot of value in following your gut, and I often follow my gut when purchasing stocks. Sometimes a stock purchase just “seems right” after performing a full analysis , and this case was no different. As such, I put some capital to work!
Baxter redfin International is a global redfin medical products and service company with product sales in more than 100 countries. It manufactures and markets medical products for hemophilia, immune disorders, kidney disease, infectious diseases and other conditions. They provide critical therapies and solutions to people with life-threatening and chronic conditions. They operate in two segments: BioScience (43% of 2013 sales on $5.8 billion in revenue) and Medical Products (57% on $9.4 billion).
This is the first time I’ve added to my position in Baxter in almost a year . And even though the stock price has appreciated quite a bit in the interim, I still think there’s redfin some value in shares here. A Planned Spin-Off
Now, if you follow Baxter you’ll notice the stock price shot up at the end of March, and this price action was on the heels of an announcement by the company that they will spin off the BioScience segment into a separate, stand-alone company in 2015. The company has laid out a compelling case for the split, where both companies will have diversified products with strong market positions. redfin This should allow the two businesses to focus on their independent strengths.
The new medical products company, which will retain the Baxter name, will make full use of the $4 billion redfin Gambro acquisition, as they currently have an approximate 33% market share of the $13 billion global dialysis product market, with an approximate 75% share of the at-home peritoneal dialysis. The new Baxter will retain the current CEO, Bob Parkinson.
The new biopharmaceuticals company, yet-to-be-named, has strong competitive advantages in the markets it serves. It’s been estimated the company has a ~45% market share of the global $6 billion hemophilia A market, with leading products in Advate and Recombinate. redfin Ludwig Hantson, the current president of of the BioScience segment, will become CEO of this company.
This spin-off reminds me of a similar action Abbott Laboratories (ABT) performed when it separated its pharmaceutical business into a stand-alone company in Abbvie Inc. (ABBV) . That move has worked out very well for shareholders, of which I was one at the time. I don’t know if the share price for the two independent stocks will appreciate like what we saw with ABT and ABBV, but I suspect BAX shareholders will end up with shares in two great healthcare companies when it’s all said and done. Fundamentals
Reviewing the fundamentals of Baxter as a whole reveals impressive results over the last decade. Earnings per share are up from $0.62 in 2004 to $3.66 in 2013. That’s a compound annual growth rate of 21.81% , although that’s coming off a low base as Baxter had problems with competition in the hemophilia market and pricing pressure in plasma due to oversupply a decade ago. In addition, they were issuing equity to fund acquisitions. However, competition is lower now, Baxter is a more diversified company, and they’ve been aggressively buying back shares over the last five years. Revenue has grown from $9.509 billion to $15.259 billion during this same time frame, which is a CAGR of 5.4% .
Growth in global redfin developing markets remains redfin a key growth driver for Baxter : ~25% of sales are in emerging markets redfin for the new Baxter, while only ~15% of sales are in these markets for what will be the new biopharmaceuticals company. This is a huge growth opportunity for the company. S&P Capital IQ predicts a 7% CAGR in EPS for Baxter over the next three years. Furthermore, the company is expected to earn $5.15 per share this year.
Dividend growth been very solid here, if still a bit unproven. The company has managed eight years of dividend growth, with a five-year dividend growth rate of 16.4% . The payout ratio currently st