Hot Stocks To Watch In Barron's: Baxter International, Dell, Stericycle

   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.