An Extra Little Bonus

Lost in the shuffle of the French election, swirling headlines about politics in the U.S., and a loaded week of earnings into this massive gap higher this morning in the broad market is some more mergers and acquisitions activity. 

Specially, medical device titan Becton, Dickinson reached a deal to acquire BCR (C.R. Bard) another medical device firm, in a $24 billion deal. 

Indeed, BDX for BCR is significant for us because we have been closely tracking and playing the medical device space for Members for quite some time now. Our thesis has been partially that too many market players are focused on large cap laggards in healthcare, such as HZNP MCK MNK and especially VRX, and thus eschewing some of the more attractive segments in healthcare like the device and supplies' plays. 

In light of the M&A deal this morning and previously (see: Cynosure earlier this year), we can consider the prospect of buyouts for going long smaller and mid-cap device plays to be an added little bonus. Of course, we still want to stay selective for the very best charts, and several device plays report earnings in the next two weeks. 

But a mid-cap growth play like PEN, below on the daily chart with earnings May 8th, is far more enticing to me on the long side than bottom-fishing VRX, even if the broad market seems like it will never go down again.