2 big reasons why you should own Cochlear Limited shares

Its bionic Cochlear implant sales are way up and the earnings outlook makes Cochlear Limited (ASX:COH) a compelling growth stock.

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Is investing really gambling?

One famous fund manager, Peter Lynch, once wrote that investing was like playing 7-card stud poker. You get dealt out a certain amount of cards and you have to make the decision to continue with each new card added.

This type of investing is not about gambling, it's about making business-like decisions based on the overall prospects ("the hand") that new developments and news create. But Lynch goes on to write that if you don't stay up-to-date with each stock you own, then you may as well be playing stud poker without looking at your cards.

Now that's real gambling!

The great thing is that investing is not like having only seven cards in your hand, but more like 70 cards. You are not pressured by time to make decisions. If a couple of bad cards (missed earnings forecasts, a drop in business, etc.) come up, you can ride it out if you think the stock is a quality company and can turn around.

That's actually when you might raise your position in the stock and reap a bigger gain later.

Recently, Cochlear Limited (ASX: COH) had a couple of very good cards come up and its "hand" is looking much better.

The well-known hearing aid and bionic ear implant maker now has quite a number of new products on the market after some delays (a previous "bad card" which pushed down the share price). As the world's leading Cochlear implant producer, customers and patients had pent-up demand for the new release of its high quality devices. Now the rush of orders is coming in.

The company was also dealt a kicker from the news that its implants will remain covered by US Medicare and Medicaid social medical aid programs. That will keep them more affordable for consumers with the government subsidy. That's a great relief for Cochlear sales.

Earnings are forecast to really take off over the next few years. With a steadily flowing pipeline of new products, the company can maintain smooth business and potentially a rising share price. I think this star stock could be a good addition to your portfolio.

Motley Fool contributor Darryl Daté-Shappard does not own shares in any company mentioned. 

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