The Unbreakable Stock

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A few years ago, my Nalgene water bottle and I fell down the side of a mountain. I landed in the emergency room, but the bottle came through without a scratch. And the company that makes it looks nearly as strong.

There's a reason for all that strength. The standard 32 oz. colored transparent bottle, the quintessential "Nalgene," is a byproduct of Thermo Fisher Scientific (NYS: TMO) , a company that specializes in leakproof, breakproof, spillproof lab and packaging containers for the sciences and hospital industries. These rugged water bottles were designed for labware, packaging, environmental, biotech and life science applications. But Thermo Fisher Scientific doesn't stop there; from chemicals to software, instruments to furniture (yes, furniture), its products are everywhere.

But can it deliver?
You'd expect this company's annual income statement to read like a holiday cards from the most boring people you know, in which nothing ever appears to change. But that's not the case. Revenue and gross profit have increased consistently over the past 12 months. Net profit has more than doubled since this time last year. Quarterly statements released July 2 reported a 22% increase in adjusted earnings per share (EPS), to a record $0.99. The company also just spent $225 million to buy back 3.8 million shares of company stock. Another very good sign? Ongoing research and development has delivered products with FDA clearance, ready to hit the market.

Watch your step
Compared to Danaher (NYS: DHR) , Thermo Fisher Scientific's closest competitor by industry and market cap, Thermo performs well, as you can see below.

Metric

Thermo Fisher Scientific

Danaher

Becton Dickinson

Cash reserves$1,356.1$551.5$1,158.0
Total assets$24,073.8$31,513.3$10,620.8
Total inventory$1,350.4$2,065.0$1,331.1
Total liabilities$8,408.1$15,023.8$5,322.4
Revenue (Q2 2011)$2,897.4$3,711.6$2,014.0
Gross profit (Q2 2011)$1,166.2$1,943.1$1,062.1

Source: Google Finance. Numbers in millions.

However, some of Thermo Fisher's strengths over its competition appear elsewhere on its balance sheet. Danaher's cash reserves, fairly consistent for the past two years, have dropped dramatically this quarter to 2008 levels. While Danaher has a higher level of total current assets, most of that is tied up in inventory and receivables, unlike Thermo Fisher Scientific, which has higher cash reserves and smaller inventory sitting around. Danaher has a total liability load nearly double that of Thermo Fisher, with 50% more long-term debt, plus accrued expenses. (Thermo Fisher has none.) Another global medical tech company, Becton Dickinson (NYS: BDX) , trails Thermo Fisher in revenue, gross profit and cash reserves, and comes up short against both Thermo Fisher's and Danaher's total assets.

Nalgene love
Thermo Fisher has managed to do what none of its competitors has: It's made scientific packaging sexy. A recent Internet search for "Nalgene love" turned up photos, videos, blogs, and articles, all from devoted fans. Seems I'm not the only one who's ever dropped one of Thermo's bottles down the side of a mountain and lived to tell the tale.

Almost all of our CAPS community thinks TMO is set to outperform the industry. What do you think? Tell me below.

At the time this article was published Fool contributor Molly McCluskey owns multiple Nalgene bottles that she's decorated with stickers, but she doesn't yet own stock in Thermo Fisher Scientific.Motley Fool newsletter serviceshave recommended buying shares of Thermo Fisher Scientific and Becton. Try any of our Foolish newsletter servicesfree for 30 days. We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. The Motley Fool has adisclosure policy.

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