Intuitive Surgical (Nasdaq: ISRG) helped pioneer the concept of robotic surgery. Its da Vinci machines – which generally cost $1 million to $2 million apiece – enable surgeons to perform more than 1 million minimally invasive surgical procedures (such as hysterectomies and prostatectomies) annually.
Intuitive has had much of this market to itself for two decades, allowing it to build up a global installed base of more than 5,600 systems.
That’s important to its strategy: Once health care providers become trained to use the da Vinci, they’re resistant to switching.
The beauty of Intuitive’s model is that it makes most of its money off the disposable instruments and accessories needed for each procedure, as well as through service contracts – as these sport fatter profit margins. This razor-and-blade business model is a big reason why the company’s revenue and profits have grown like clockwork for years.
While 2020 is going to be a rough year, surgeries can’t be delayed indefinitely. Longer term, the demand for minimally invasive surgery should continue to grow, which plays right into Intuitive’s hands.
Intuitive’s balance sheet is also impressive. With $5.9 billion in cash and zero long-term debt, there’s no doubt the company can easily handle the short-term disruption to its business. (The Motley Fool owns shares of and has recommended Intuitive Surgical.)
Ask the Fool
Q: Which brokerages will charge me the least to buy or sell stock? – R.W., Augusta, Georgia
A: Many major brokerages now offer commission-free trading. Regardless of commission fees, though, it’s best to trade relatively infrequently – buying shares of companies you’ve researched and believe in, with the aim of holding them for many years. When you buy and sell frequently, you don’t give great stocks a chance to perform for you, and any gains you rack up will face the short-term capital gains tax rate, which can be higher than the long-term rate.
If you trade infrequently, paying the absolute least per trade isn’t that critical, so assess other brokerage characteristics and focus on those that matter most to you – such as a wide range of available mutual funds, or access to research reports, banking services or brick-and-mortar locations. You can learn about many good zero-commission brokerages at Fool.com/the-ascent.
Q: What are ADRs? – H.D., Topeka, Kansas
A: “ADR” stands for “American depositary receipt;” ADRs are securities representing shares of foreign companies that trade on foreign stock exchanges. The ADRs trade on American stock exchanges, making it easy for U.S. investors to invest in foreign companies.
Let’s say you wanted to invest in India’s Tata Motors, and ADRs didn’t exist: You’d need to convert your dollars into rupees and then buy shares on the Indian stock market, perhaps after opening an Indian brokerage account – if you were even able to do that. But since there’s an ADR for Tata Motors (with the ticker symbol TTM), you can simply buy shares here in the U.S.
Read up on ADRs if you’re interested, as there’s more to know, especially related to fees and taxes.
My dumbest investment
My dumbest investment was selling 1,000 shares of Shopify at $180 to buy shares of a different company at $17. Well, the Shopify shares continued to climb, and the other company headed south. I learned to stop chasing big gains. Focus on the big picture instead, and invest for the long term. – G.B., online
The Fool responds: Many investors end up regretting having sold great-performing stocks too soon. Shares of Shopify, a company that helps other companies set up and run online stores, were recently trading about $1,030, so your investment would have more than quintupled in value if you hadn’t sold when you did.
Selling the shares is clearly regrettable in hindsight, but think back to when you sold. Did you have confidence in the company and think its shares would keep rising? Or did you think they were overvalued? It can make sense to sell out of a stock that you’ve studied and that you think is considerably overvalued, especially if you have found a different stock that’s seemingly quite undervalued.
Note that some stocks that grow quickly over many years can always look overvalued. Amazon, for example, has often seemed too richly priced – but then, despite some volatility, it routinely keeps hitting new highs. If you’re not sure what you should do, you might just compromise and sell part of your position.
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