.floatimg-left-hort { float:left; } .floatimg-left-caption-hort { float:left; margin-bottom:10px; width:300px; margin-right:10px; clear:left;} .floatimg-left-vert { float:left; margin-top:10px; margin-right:15px; width:200px;} .floatimg-left-caption-vert { float:left; margin-right:10px; margin-bottom:10px; font-size: 12px; width:200px;} .floatimg-right-hort { float:right; margin-top:10px; margin-left:10px; margin-bottom:10px; width: 300px;} .floatimg-right-caption-hort { float:left; margin-right:10px; margin-bottom:10px; width: 300px; font-size: 12px; } .floatimg-right-vert { float:right; margin-top:10px; margin-left:10px; margin-bottom:10px; width: 200px;} .floatimg-right-caption-vert { float:left; margin-right:10px; margin-bottom:10px; width: 200px; font-size: 12px; } .floatimgright-sidebar { float:right; margin-top:10px; margin-left:10px; margin-bottom:10px; width: 200px; border-top-style: double; border-top-color: black; border-bottom-style: double; border-bottom-color: black;} .floatimgright-sidebar p { line-height: 115%; text-indent: 10px; } .floatimgright-sidebar h4 { font-variant:small-caps; } .pullquote { float:right; margin-top:10px; margin-left:10px; margin-bottom:10px; width: 150px; background: url(http://www.dmbusinessdaily.com/DAILY/editorial/extras/closequote.gif) no-repeat bottom right !important ; line-height: 150%; font-size: 125%; border-top: 1px solid; border-bottom: 1px solid;} .floatvidleft { float:left; margin-bottom:10px; width:325px; margin-right:10px; clear:left;} .floatvidright { float:right; margin-bottom:10px; width:325px; margin-right:10px; clear:left;} Dear Mr. Berko:

Dear P.T.:

Varian Medical Systems Inc. (VAR-$54.70) butters my bagel. According to a couple of docs I know, VAR is the world’s largest maker of integrated cancer therapy systems, which treat thousands of patients every day. These cancer therapy systems are responsible for 85 percent of the company’s $2.3 billion in revenues.

VAR is also a premier supplier of X-ray tubes and flat-panel digital subsystems for imaging in medical, scientific and industrial applications, from which the company derives 15 percent of its revenues.

Management spends more than $130 million a year on research, and Varian’s high-quality products are considered the ne plus ultra by medical communities in Europe, South America, Asia and the United States. Proof of the pudding is VAR’s revenues, which have increased in each of the past 10 years from $697 million to an expected $2.3 billion this year; in that same time frame, earnings have increased from 41 cents a share to an expected $2.85 this year.

Include a 14.5 percent net profit margin, and we’re talking about some impressive numbers that have been favorably reflected in the company’s share price, which has split (2 for 1) twice since 2001 and tripled in value since then.

Meanwhile, Varian has $20 million in debt, a cash flow of $3.15 per share and does not pay a dividend on its 125 million shares. This is a squeaky-clean company with a sterling reputation in the world’s medical communities and is widely held by some of the most prominent funds in the industry. This is why VAR, which owns 71 percent of the U.S. market and 52 percent of the foreign market, could be a $100 stock in the next three to five years.

Johnson & Johnson (JNJ-$60.60), the world’s largest maker of health-care products, has been in business for more than 120 years. Revenues have doubled in the past decade, and earnings, dividends and book value have nearly tripled, but JNJ’s 2.8 billion shares have remained almost as flat as a pancake.

JNJ’s product diversity covers the landscape. Every day, millions of consumers around the world purchase the company’s products. Without question, JNJ’s consumer products are unfailingly the best. And every day, hundred of thousands of physicians, dentists, nurses, medical technicians and veterinarians around the world use a Johnson & Johnson product.

Every single day of this year, these good folks spend $189 million for baby care, non-prescription drugs, sanitary care, skin care, surgical instruments, diagnostics, orthopedics, contact lenses and anti-psychotic, anti-infective and dermatological drugs. And every day JNJ makes a net profit before taxes of $37 million on these items.

Though these numbers are mind-boggling, the share performance has been enormously disappointing. During the past 10 years, JNJ shares have been unable to rise above the $70-$72 level.

Johnson & Johnson would look nice in your portfolio, but nice doesn’t cut it when you want price appreciation. So buy VAR.

Please address your financial questions to Malcolm Berko, P.O. Box 1416, Boca Raton, Fla. 33429 or e-mail him at malber@adelphia.net. ©2010 Creators.com