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Artificial Joints, Real Profits

Growing waistlines. Throbbing knees. Failing hips.

For the 80 million Baby Boomers nearing retirement, old age may not be too kind. For makers of artificial joints, however, these may be the golden years. Boosted by some of the highest profit margins in medicine, artificial hips and knees are now a $7 billion market.

President Barack Obama may slow these companies' growth. With price tags for fake joints running as high as $15,000, Congress targeted implant profit margins to help pay for the health care overhaul. Lawmakers hope an excise tax will bring in $20 billion over the next decade.

Investors interested in this space should pay attention to the regulation, said Brian Kelly, founder of Kanundrum Capital. He thinks the new laws could hurt margins.

Medtronic has been a leader in this space, said Joe Terranova, chief market strategist at Vitrus Investment Partners. He recommends buying shares of the Minneapolis-based company, but added that a lot of hedge funds own Boston Scientific .

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CALL TO THE FLOOR: DICK'S SPORTING GOODS

While the S&P 500 is down on the year after the latest round of selloffs, one company is not only beating the index this year, but over the past decade: Dick's Sporting Goods .

The Corapolis, Pa.-based retailer beat revenue expectations when it reported second-quarter earnings results Thursday morning. Speaking on Fast Money, CEO Edward W. Stack said their customer seems to be less sensitive to any slowdowns in consumer spending. He said the market for sporting goods is growing slightly, but DKS is also taking market share from its privately held competitor, The Sports Authority.

While Stack said its Golf Galaxy chain is accretive to earnings, the company is closing 12 stores that weren't turning a profit. The current management team only started overseeing the chain last year, he explained. He said they will identify what stores aren't working and close them, so they can ultimately grow the chain.

Watch the videoto see the full interview.

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WHERE WILL GOOGLE SPEND ITS CASH?

Investors have been clamoring for technology companies to spend the cash on their books. Google , for example, has $30 billion cash and Pipper Jaffray's tech analyst Gene Munster thinks he knows where they're going to spend it.

The first probability, he said, is to spend it on mobile. Consumers are changing the way they use the Internet and are becoming more reliant on their wireless devices. Google will try and switch its focus from desktop computers to mobile devices.

The other option, Munster surmised, is for Google to spend on media. There is a huge shift in how consumers watch television, he said. He thinks they will shift into media distribution, even though they hadn't in the past, because thre is a lot of money to be made here.

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BONDS IN A BUBBLE
?

Although some worry the bond market is in a bubble that could soon burst, keep buying them, said Dan Greenhaus, chief economic strategist at Miller Tabak. What's his reasoning?

Watch the video to find out.



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Trader disclosures for Aug. 19, 2010:

Tim Seymour
Seymour owns (AAPL)
Seymour owns (BAC)
Seymour owns (F)
Seymour owns (INTC)
Seymour owns (MSFT)

Guy Adami
Adami owns (AGU)
Adami owns (BTU)
Adami owns (NUE)
Adami owns (C)
Adami owns (GS)
Adami owns (INTC)
Adami owns (MSFT)
Adami’s wife works at Merck

Brian Kelly
Accounts managed by Kanundrum Capital own (RIMM)
Accounts managed by Kanundrum Capital own (GLD)
Accounts managed by Kanundrum Capital own (GDXJ)
Accounts managed by Kanundrum Capital own (ANDE)
Accounts managed by Kanundrum Capital own U.S. Dollar
Accounts managed by Kanundrum Capital own Japanese Yen
Accounts managed by Kanundrum Capital own Swiss Franc
Accounts managed by Kanundrum Capital is short (AFL)
Accounts managed by Kanundrum Capital is short (IAI)
Accounts managed by Kanundrum Capital is short (RTH)
Accounts managed by Kanundrum Capital is short the U.K. Pound
Accounts managed by Kanundrum Capital is short (MCO)

Joe Terranova
Terranova owns (V)
Terranova owns (NRG)
Terranova owns (POT)
Terranova owns (OXY)
Terranova owns (GLD)
Terranova owns (BAX)
Terranova owns (PFE)
Terranova owns (SU)
Terranova owns (XBI)
Terranova owns (GOOG)
Terranova owns (LRCX)
Terranova owns (AXP)
Terranova owns (C)
Terranova owns (GS)
Terranova owns (BMO)
Terranova owns (MSFT)
Terranova owns (FCX)
Terranova owns (APA)
Terranova owns (TBT)

Terranova is chief market strategist of Virtus Investment Partners, LTD.
Virtus Investment Partners own more than 1% of (ABAX)
Virtus Investment Partners own more than 1% of (ALK)
Virtus Investment Partners own more than 1% of (AMKR)
Virtus Investment Partners own more than 1% of (CASS)
Virtus Investment Partners own more than 1% of (CSVI)
Virtus Investment Partners own more than 1% of (XLY)
Virtus Investment Partners own more than 1% of (XLP)
Virtus Investment Partners own more than 1% of (DRYS)
Virtus Investment Partners own more than 1% of (EXR)
Virtus Investment Partners own more than 1% of (XLI)
Virtus Investment Partners own more than 1% of (IGE)
Virtus Investment Partners own more than 1% of (LDR)
Virtus Investment Partners own more than 1% of (LPHI)
Virtus Investment Partners own more than 1% of (XLB)
Virtus Investment Partners own more than 1% of (MGRC)
Virtus Investment Partners own more than 1% of (NRCI)
Virtus Investment Partners own more than 1% of (DBV)
Virtus Investment Partners own more than 1% of (SUBK)
Virtus Investment Partners own more than 1% of (XLK)
Virtus Investment Partners own more than 1% of (XLU)
Virtus Investment Partners own more than 1% of (WDFC)
Virtus Investment Partners own more than 1% of (YDNT)

Peter Boockvar
***No Disclosures***

Brent Thill
The U.S. equity strategist, a member of his team, or one of their household members has a long common stock position in Microsoft Corp.

The U.S. equity strategist, a member of his team, or one of their household members has a long common stock position in Oracle Corporation.

This company/entity is, or within the past 12 months has been, a client of UBS Securities LLC, and investment banking services are being, or have been, provided.: Microsoft, Symantec

This company/entity is, or within the past 12 months has been, a client of UBS Securities LLC, and non-investment banking securities-related services are being, or have been, provided.: Microsoft, Symantec

This company/entity is, or within the past 12 months has been, a client of UBS Securities LLC, and non-securities services are being, or have been, provided.: Microsoft

Within the past 12 months, UBS Securities LLC has received compensation from this company/entity: Microsoft, Symantec

Dan Greenhaus
***No Disclosures***

Gene Munster
Piper Jaffray makes a market in (GOOG)

Brian Stutland
***No Disclosures***

Symbol
Price
 
Change
%Change
GOOGL
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BSX
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DKS
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MDT
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