Unformatted text preview: Zimmer turned up recently on our Foxhole screen, which looks for safe stocks to hold when you're worried about the market's direction. The screen uses beta, a measure of volatility, to seek out stocks that tend to zig and zag 30% less than the overall market. It also looks for strong balance sheets, healthy sales and earnings growth and modest stock valuations. Based in Warsaw, Ind., Zimmer has trailing 12-month sales of $3.4 billion and an operating margin that's one of the best of its industry: 33.6% over the past year. Its stock has climbed 129% over the past five years. Long-term growth prospects for Zimmer are strong. Wall Street expects it to increase earnings by 16% a year over the next five years. Its shares trade at 21 times forecast 2006 earnings. Divide the P/E ratio by the growth forecast and you get a PEG ratio of around 1.3. That makes the stock look about 15% cheaper than the broad market and a smidgen cheaper than its peer group....
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This note was uploaded on 09/27/2009 for the course UGBA 133 taught by Professor Distad during the Summer '08 term at Berkeley.
- Summer '08