DOW JONES NEWSWIRES
Investors suffering from anemic returns might find that shares
of Baxter International Inc. (BAX) offer just the right therapy.
The giant health-care company, which specializes in blood-protein
treatments and medical-delivery systems for hemophilia, infectious
diseases and kidney failure, among other ailments, is one of the
few large-cap companies that delivered double-digit earnings growth
last year. Even better, it is expected to give a repeat performance
this year.
Is Dell Inc. (DELL) dead? Read technology blogs and Wall Street
research about the personal-computer seller, and it's clear many
commentators are thinking along such downbeat lines. After all,
Dell's business - and its shares - both resemble shrunken versions
of their once-glorious selves. It's far too soon, however, to hang
a "Do Not Resuscitate" sign on Dell's door. For one thing, the
Round Rock, Texas, company is sitting on $9.5 billion of cash,
equal to $5 a share. Back that out of the stock price, and you're
paying just $3.61 a share for a computer-wholesaling business that
just netted $2.5 billion, or $1.39 a share in the fiscal year ended
Jan. 30, and could earn $1.11 in fiscal '10. Average these
estimates, and the business sports a price/earnings multiple of
just under three. If the company can execute on a turnaround plan,
its stock could rebound. But the comeback won't come quickly.
If you are among the many investors who view waste-management
stocks as fortresses in an economic slump, you might look upon
Stericycle Inc. (SRCL) as Fort Knox. The Lake Forest, Ill.,
medical-waste-disposal outfit's stock has averaged a 30% annual
return over the past decade. In fact, Stericycle has met or beaten
analysts' quarterly operating profit estimates for more than 40
straight quarters, including the recently reported fourth. The 18%
profit gain reported in the final quarter suggests Stericycle is
indeed still cleaning up during this downturn. In fact, it is a
solid bet to outshine the overall market over the next 18 months.
Stericycle shares, which have been trading in the mid- to upper-40s
lately, look as if they could climb back toward last year's high of
$66 within two years.
In the U.S., President Barack Obama has just pledged to spend
billions on environmentally friendly technologies, while Congress
is planning to put more money and muscle behind the search for
energy alternatives and pollution controls. Greater government
funding bodes well for some pure plays in the solar, wind, ethanol
and biomass industries. But it bodes even better, near term, for
well-established, diversified and financially healthy companies
like Switzerland's ABB Ltd. (ABB), Florida utility FPL Group Inc.
(FPL), Waste Management Inc. (WMI), Jacobs Engineering Group Inc.
(JEC) and electrical-products supplier Eaton Corp. (ETN). All are
visible and increasingly powerful players in areas given spending
priority: energy conservation, infrastructure renewal and the
build-out of a "smarter" power grid.
