Strong Profit Fueled Biomet's Mighty Run.(THE SMART INVESTOR)(WINNING WAYS)

Byline: KEN HOOVER

The crash of Oct. 19, 1987, took 20.47% off the Dow Jones industrial average that day. It caused so much damage that it took months for stocks to form sound new bases. One of the first to do so was Biomet, a fast-growing maker of orthopedic products.

The company pioneered artificial joints like hips and knees that promised to keep a generation of aging athletes on the tennis courts, or at least among the walking.

Not only were its products helping tens of thousands of people, but the company was making serious money.

Earnings accelerated during the four quarters ended June 1988, rising 40%, 56%, 61% and 65%. Sales rose 40%, 60%, 108% and 93%. The five-year growth rate was 57%. The Earnings Per Share Rating was 99. The Relative Strength Rating was 88.

Mutual funds owned 16% of the company. The medical instruments group had a Relative Strength Rating of 76, with five stocks in the group topping 90.

Biomet's fundamentals couldn't have been much better. But the 41-week base might not have been immediately enticing. It corrected 56.3%. Less than 40% is preferred. And it did most of its correcting in the three weeks after the crash, going nearly straight down (1). The last week of the descent had the heaviest volume in the stock's history.