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Strategies & Market Trends : Value Investing

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From: Paul Senior	4/24/2009 11:23:52 AM
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Health care: Looking at BAX and BDX now. BAX looks more attractive to me. I am a buyer (of a few shares) today. (Stock may be more a GAARP play than a value play) From the Apr. 16 report: "Chief Executive Robert Parkinson said the company's performance has not been hurt by the ongoing recession. "To date we have not experienced any meaningful impact," Parkinson told analysts. "We continue to believe that we are well-positioned given our geographic reach and the medically necessary nature of our portfolio." "Baxter continued its investment in research and development, raising spending 12 percent to $212 million for the quarter." "Baxter also modestly raised the low end of its full-year profit forecast range. The company now expects an adjusted profit of $3.72 to $3.78 per share, compared with an earlier forecast of $3.70 to $3.78 per share. Analysts expect profit of $3.74 per share." finance.yahoo.com With the stock now at $48.74, 48.74/3.72 = p/e of 13. That's high compared to several other health care stocks I am following (and high compared to big pharma). For BAX though, p/e has always (past ten years) averaged over 13, and if they can get through these times unscathed by the "on-going recession", the stock 'should' (-g-) sell again at higher prices based on higher earnings and an upward p/e valuation from 13. Small dividend: after holding steady from 2001-2006, it has increased each year since.

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