Skip to Content
Stock Strategist Industry Reports

Dental Industry Provides Opportunities

The dental industry has attractive long-term characteristics.

Mentioned: , ,

Although the stock market has rebounded as of late, we don't think it's too late to go on the hunt for value. The dental sector is a decent place to start, as it has shown some resistance to economic recessions in the past. This time around has not been much different, as some of the stocks we cover in this industry, including  Dentsply International (XRAY),  Patterson (PDCO), and  Henry Schein (HSIC), have all outperformed the broad market year to date. The overall industry has definitely shown signs of slower growth over the last year, particularly with respect to elective and cosmetic procedures. However, we think it has the ability to rebound faster than the overall market when the current recession begins to reside, partly as consumers start to pile into dentist offices for treatments previously canceled or delayed for financial reasons.

Of the four dental-related companies we cover, three are currently rated 4 stars or higher. While the share prices of these firms have bounced back off their lows from earlier this spring, we feel these companies still have some room to run over the next year or so for several reasons. The dental industry benefits from a relatively stable outlook along with a number of trends that support long-term growth. While spending has slowed recently in lockstep with the current recession, it is expected to recover to a 4.3% growth rate by 2010, on its way to a more normalized run rate of 6% annual growth, according to the Centers for Medicare and Medicaid (CMS). There are several other trends that underscore long-term stability. People are maintaining their teeth longer in general and the demand for cosmetic procedures has grown. Overseas, awareness of the need for healthy teeth is growing, with demand for dental services and products moving in lockstep with this sentiment. We think the international market will likely be a sweet spot for future growth for dental players large and small.

Bill Buhr does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.

Transparency is how we protect the integrity of our work and keep empowering investors to achieve their goals and dreams. And we have unwavering standards for how we keep that integrity intact, from our research and data to our policies on content and your personal data.

We’d like to share more about how we work and what drives our day-to-day business.

We sell different types of products and services to both investment professionals and individual investors. These products and services are usually sold through license agreements or subscriptions. Our investment management business generates asset-based fees, which are calculated as a percentage of assets under management. We also sell both admissions and sponsorship packages for our investment conferences and advertising on our websites and newsletters.

How we use your information depends on the product and service that you use and your relationship with us. We may use it to:

  • Verify your identity, personalize the content you receive, or create and administer your account.
  • Provide specific products and services to you, such as portfolio management or data aggregation.
  • Develop and improve features of our offerings.
  • Gear advertisements and other marketing efforts towards your interests.

To learn more about how we handle and protect your data, visit our privacy center.

Maintaining independence and editorial freedom is essential to our mission of empowering investor success. We provide a platform for our authors to report on investments fairly, accurately, and from the investor’s point of view. We also respect individual opinions––they represent the unvarnished thinking of our people and exacting analysis of our research processes. Our authors can publish views that we may or may not agree with, but they show their work, distinguish facts from opinions, and make sure their analysis is clear and in no way misleading or deceptive.

To further protect the integrity of our editorial content, we keep a strict separation between our sales teams and authors to remove any pressure or influence on our analyses and research.

Read our editorial policy to learn more about our process.