New Products Gave Ballard Medical A Big Lift.(THE SMART INVESTOR)(WINNING WAYS)

Byline: KEN HOOVER

In the bull market that began in October 1990, anything with "bio," "med" or "health" in its name took off like a rocket. It was like the bubble years of 1998 to 2000 when anything relating to the Internet ran up.

In fact, it was a sort of bubble for medical and biotech stocks. Once they peaked in early 1992, the party was over. It would be the late 1990s before most of them saw their old highs again.

Ballard Medical Products was typical of the small, specialty medical companies that led the market. Its flagship product was the Trach Care endotracheal suctioning catheter, which accounted for 80% of sales. It was developing another product, Foam Care, a soap that surgeons could use to scrub their hands.

In the four quarters before Ballard's stock made its big move, earnings rose 70%, 31%, 46% and 7%. Sales were up 46%, 48%, 40% and 33%. The five-year growth rate was 124%. Earnings had risen for five straight years. Analysts were expecting 40% growth in 1991.

The Earnings Per Share Rating was 91. The Relative Strength Rating was 96. The 50-day ratio of up-to-down volume was 1.0. Mutual funds owned 6% of the float.

The chief drawbacks were a quarter of mediocre earnings growth (7%) and one day during the base that was down on high volume (1). Otherwise, it was an excellent base for a good growth stock.