"Being contrarians, we are always looking for laggard stocks with the potential to rebound," says turnaround expert George Putnam.

In his The Turnaround Letter, the advisor reviews four medical and pharmaceutical stocks that have been among the worst performers in the S&P 100 since the market bottom. Despite their poor performance, he thinks they may be due for a rebound.

"We think that investors who got left behind by the first leg of the market rally are struggling to catch up.

Baxter International (NYSE: BAX - option chain) stock is trading lower today after the company announced this morning it expects EPS growth of 11 to 13 percent and sales growth of 7 to 8 percent over the next 5 years. While most other stocks are soaring today, traders are unimpressed and this news is holding BAX back. If you think this stock won't be rising too far in the coming months, then it could be a good time to look at a bearish hedged play on BAX.

This morning, BAX opened at $56.50. So far today the stock has hit a high of $57.05 and a low of $55.51. As of 12:10, BAX is trading at $55.71, down 24 cents (-0.4%). The chart for BAX looks bullish and S&P gives BAX a positive 4 STARS (out of 5) buy ranking.

Baxter International (NYSE: BAX - option chain) shares are headed higher today after the company reported an adjusted first-quarter profit of $516 million, or 83 cents per share, beating analysts' estimates of 81 cents per share. If you think that the stock won't fall by too much in the coming months, then now could be a good time to look at a bullish hedged trade on BAX.

BAX opened this morning at $51.03. So far today the stock has hit a low of $50.90 and a high of $51.95. As of 11:55, BAX is trading at $51.53, up $2.28 (4.6%). The chart for BAX looks bullish and S&P gives BAX a positive 4 STARS (out of 5) buy ranking.

MAJOR PAPERS:

• The Wall Street Journal reported that the focus of reports of four deaths and 350 allergic reactions to Baxter International Inc's (NYSE: BAX) generic version of the blood thinner drug Heparin, and the ingredients supplied by a Chinese manufacturer, also includes Wisconsin-based Scientific Protein Laboratories, a co-owner of the Chinese manufacturing plant, and majority owned by American Capital Strategies Ltd (NASDAQ: ACAS), a Maryland buyout firm.
• Citigroup Incorporated (NYSE: C) has suspended investors at its CSO Partners hedge fund from withdrawing their money after they attempted to pull more than 30% of the fund's nearly $500M in assets, the Wall Street Journal reported.
• AT&T Inc (NYSE: T) is seeking more revenue from India as it tries to expand its consumer mobile phone operations outside the U.S, the Financial Times reported.

OTHER PAPERS:

• According to the New York Times, the FDA broke its own rules by approving for sale Baxter International's Heparin without first inspecting a Chinese plant where the drug's key ingredient is made.

MAJOR PAPERS:

• The active ingredient in Baxter International Inc's (NYSE: BAX) generic version of the anticlotting drug heparin, under investigation for four deaths and hundreds of bad reactions, was made in China, the Wall Street Journal reported.
• Structured investment vehicles that provide short term debt to fund the purchases of municipal bonds and student loans are under increasing pressure, according to the Wall Street Journal's "Heard on the Street". Citigroup Incorporated (NYSE: C), JP Morgan Chase & Co (NYSE: JPM) and Merrill Lynch & Co Inc (NYSE: MER) are among the banks that could be affected.

OTHER PAPERS:

• The New York Times reported that Hewlett-Packard Company (NYSE: HPQ) has settled with The New York Times Company (NYSE: NYT) and McGraw Hill Companies Incorporated's (NYSE: MHP) BusinessWeek journalists related to a spying scandal that stemmed from obtaining telephone records. The involved parties did not disclose the amount of the settlement.

WEB SITES:

• Mike Zafirovski, CEO of Nortel Networks Corporation (NYSE: NT), said the company would examine possible opportunities to be taken over "when they arise." Mr. Zafirovski did not comment on rumors of a Motorola Inc (NYSE: MOT) merger, Reuters reported.

MOST NOTEWORTHY: Amag Pharmaceuticals, Corn Products and Alpharma were today's noteworthy initiations:

• Baird initiated Amag Pharmaceuticals (NASDAQ: AMAG) with an Outperform rating and believes concerns regarding ferumoxytol approvability are misplaced.
• JP Morgan assumed coverage of Corn Products (NYSE: CPO) with an Overweight rating and points to the company's growth in emerging markets and improved business economics in its core U.S. market.
• RBC Capital is positive on Alpharma's (NYSE: ALO) Flector opportunity in the U.S. topical NSAID market. The firm started shares with an Outperform rating and $28 target.

OTHER INITIATIONS:

• Merrill resumed coverage of Baxter (NYSE: BAX) with a Buy rating.
• Goldman initiated Teradyne (NYSE: TER) with a Neutral rating and $11 target.
• Allianz AG (NYSE: AZ) was initiated with a Buy rating at Societe Generale.

In the business world, innvoation leads to longevity. There is a medical products firm in Deerfield, Illinois that was the first manufacturer of commercially prepared intravenous solutions. It was also responsible for such landmark developments as the first container that could store blood for more than a few hours, the first means of separating plasma from whole blood and storing it for future use, and the first disposable total-bypass blood-oxygenator. The company has been in business for 76 years.

Baxter International (NYSE: BAX) is a diversified medical products and services company. It provides devices, pharmaceuticals, and biotechnology for the treatment of hemophilia, immune disorders, cancer, infectious diseases, kidney disease and trauma. The BioScience segment manufactures plasma-based therapies for immune disorders, biosurgery products for hemostasis, and vaccines. The Medication Delivery unit makes intravenous solutions and administration sets. The Renal segment manufactures products for peritoneal dialysis, a home therapy for people with end-stage renal disease. Boston Scientific (NYSEL: BSX) is a major competitor.

Investors were pleased last week, when Citigroup upgraded the shares from "hold" to "buy." Analyst Matthew J. Dodds said the firm can increase its gross margins above Wall Street expectations, a welcome prediction ahead of the Baxter's fourth quarter report (1/24). He also predicted 2008 EPS of $3.21, versus the Street expectation of $3.10.

In the business world, innovation leads to longevity. There is a medical products firm in Deerfield, Illinois, that was the first manufacturer of commercially prepared intravenous solutions. It was also responsible for such landmark developments as the first container that could store blood for more than a few hours, the first means of separating plasma from whole blood and storing it for future use, and the first disposable total-bypass blood-oxygenator. The company has been in business for 76 years.

Baxter International (NYSE: BAX) is a diversified medical products and services firm. It provides devices, pharmaceuticals, and biotechnology for the treatment of hemophilia, immune disorders, cancer, infectious diseases, kidney disease and trauma. The BioScience segment manufactures plasma-based therapies for immune disorders, biosurgery products for hemostasis, and vaccines. The Medication Delivery unit makes intravenous solutions and administration sets. The Renal segment manufactures products for peritoneal dialysis, a home therapy for people with end-stage renal disease. The company has more than 250 facilities in 50 countries around the world. Boston Scientific (NYSE: BSX) is a major competitor.