Investors Clean Up With Sterilization Stock

With swine flu fears on the rise, companies in the business of sterilization have seen an influx of investors.

Johnson & Johnson (JNJ), Cantel Medical (CMN) and Steris (STE) are a few names I came across while reading a recent Barron’s article. According to the article, shares of Steris have risen 54 percent since early March and from the article’s title (”Shares of Sterilization Equipment Maker Steris Will Keep Rising”) they are expected to keep climbing.

Photo by bratha, courtesy of flickr

With a rise like that, and such a bold title, I had to explore.

After reading the article and digging into the stock, a couple of things threw me off.

52-week performance - In the past year, the stock is up 9 percent versus a gain of 19 percent for the S&P 500. I was expecting more after the meteoric rise since March. Turns out, Cantel Medical has risen almost 59 percent in the same period.

Sales growth - Year over year, quarterly revenue growth is actually down 9 percent. Of the three companies, Cantel is the only one with positive revenue growth.

Barron’s bottom line on Steris: STE “could keep climbing to 40 as capital spending revives and the company’s earnings grow.”  One fund manager believes the rise could happen in a year.

My bottom line: I’ll keep an eye on Steris, but this article left me wanting to know more about Cantel.