Although Baxter International's (NYSE: BAX) shares have underperformed since the Buy rating on March 13, 2009 at a price of $51.16, there's been no change in the company's positive operational characteristics, hence I'm Reiterating my Buy rating.

And what's Baxter's key operational characteristic? Versatility. Baxter makes of a variety of medical products across three divisions, including drugs and vaccines, dialysis equipment, and IV supplies. The company should record a FY2009 revenue increase of 2-4%, led by demand for recombinants, plasma proteins, and antibody therapies in its bioscience unit.

"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.

I'm reiterating my Buy rating for Baxter (NYSE: BAX) first recommended on March 13, 2009 at a price of $51.16.

Baxter's near-recession-proof story remains intact. Baxter, a maker of a variety of medical products across three divisions, including drugs and vaccines, dialysis equipment, and IV supplies, should record a FY2009 revenue increase of 2-4%, led by demand for recombinants, plasma proteins, and antibody therapies in its bioscience unit.

The earnings crunch ramps up this week, and again expectations are generally low. Among the so-called bellwethers that are expected to report lower earnings year over year are CSX Corp. (NYSE: CSX), Gannett Inc. (NYSE: GCI), General Electric Co. (NYSE: GE), Harley Davidson Inc. (NYSE: HOG), Intel Corp. (NASDAQ: INTC), International Business Machines Corp. (NYSE: IBM), Johnson & Johnson (NYSE: JNJ), Marriott International Inc. (NYSE: MAR), Mattel Inc. (NYSE: MAT), Nokia Corp. (NYSE: NOK), and Yum! Brands Inc. (NYSE: YUM). Analysts surveyed by Thomson Reuters do expect the profits of CSX, Gannett, Mattel, and Nokia to be up from the previous quarter, however.

A number of financial companies, big and small, are scheduled to report second-quarter earnings this week, providing a good look at what's going on in the sector. Perhaps the best news will be coming from Citigroup and Marshall & Ilsley. While they are expected to post further losses, at least they are headed in the right direction by narrowing those losses year over year.

I remember Toronto during SARS. As one of the harder hit areas, it was not a happy place. It was the end of winter, but that miserable, cold winter just didn't want to end. People walked the streets in a gloomy haze, afraid to take the subway and giving dirty looks to anyone brazen enough to cough in public. Worse, I couldn't even visit a friend in the hospital. All things considered though, in global pandemic terms, it was over relatively quickly. Let's hope swine flu will be the same.

In the meantime, let's put on our investors hats and see what's in store for some stocks:

Travel and tourist stocks
This is one of the worst hit areas, especially airlines, as people may cancel their travel plans. For example, AMR Corp. (NYSE: AMR) traded over 9 percent lower an hour after the open. Royal Caribbean Cruises (NYSE: RCL) was down over 15 percent. In fact UBS downgraded these airlines and hotels this morning: AMR, Continental Airlines (NYSE: CAL), Host Hotels and Resorts (NYSE: HST), Lasalle Hotel Properties (NYSE: LHO), Marriott (NYSE: MAR), United Airlines (NASDAQ: UAUA), US Airways (NYSE: LCC). Carnival Cruise Lines (NYSE: CCL) also declined considerably. Best to stay away from the sector.

Here are some highlights from this past week's earnings coverage from BloggingStocks:

• Abbott Laboratories (NYSE: ABT) Q1 profit edged past expectations despite lower sales of Humira.
• AMR Corp. (NYSE: AMR) posted a smaller-than-expected Q1 loss, sending shares sharply higher.
• Baxter International Inc. (NYSE: BAX) reported better-than-expected Q1 earnings, sending share higher.
• BP (NYSE: BP) and other oil companies were downgraded due to higher environmental costs.
• Charles Schwab Corp. (NASDAQ: SCHW) Q1 earnings declined but still topped analysts' expectations.
• Chevron Corp. (NYSE: CVX) said Q1 earnings would be lower due to a weaker dollar and lower oil prices.

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.

Alcoa Inc. (NYSE: AA) started off the new earnings season with disappointing results that helped to stifle the recent rally. Was that enough of a sign of what's to come? No, probably not. But the earnings reports start to fly in earnest this week, which should provide a more detailed picture of the state of things.

Analysts surveyed by Thomson Reuters anticipate that some of the biggest names will prove to be holding their own. Google Inc. (NASDAQ: GOOG) is expected to post a profit of $4.91 per share, marginally higher than a year ago, and Johnson & Johnson's (NYSE: JNJ) expected $1.22 per share profit is slightly lower year over year. Even Mattel Inc.'s (NYSE: MAT) estimated loss of $0.13 per share is the same as in the year-ago period.

The Dow's difficult start in 2009, following on the heels of 2008's awful performance, has done little to attract new money into the market. And neither has the U.S. economy, which remains entrenched in a pronounced recession, with few signs that it's bottomed.

The economic conditions invalidate most sectors, but there are a few that offer promise. One is health care, which is why Baxter International (NYSE: BAX) is worth a review.

Ted Allrich is the founder of The Online Investor and author of the book: Comfort Zone Investing: Build Wealth and Sleep Well at Night. In this weekly column, he'll offer advice to investors who are just getting started.

For a better investing year in 2009, think about championship basketball. Winners at every level have one thing in common: defense. It's defense that wins rings. And this year, in the stock market, defense will keep you alive. It will be the kind of year where making a little money makes you a winner. Think defensively until there are clear signs that the economy is improving.

First, keep your expectations low. No one knows when the current economic cycle will end and begin to heal. What we do know is that all indicators keep going lower: housing starts, employment, consumer spending, housing prices. While the market discounts good news well in advance (some 6 to 9 months ahead of the real numbers), there's no indication from any front that better days are ahead. We know the new administration will spend money to create jobs so more spending power will be in the economy. We know there will most likely be tax breaks for companies to encourage production and hiring. But none of that is in place. Investors have to wait and see how and if these develop and what effect they will have on the economy and on stocks. It might take all year. Or longer. If it does, the stock market won't be doing too much.

As the second quarter earnings crunch begins in earnest this week, the bear market has investors jittery and prognosticators spinning out dire warnings. In the wake of mixed results from Alcoa (NYSE: AA) and General Electric (NYSE: GE) kicking things off last week, here's a look at what Wall Street is expecting from many of the companies scheduled to report this coming week.

Analysts surveyed by Thomson Financial are expecting the following companies to report a rise in earnings when compared to the same period of the previous year.

• Nucor Corp. (NYSE: NUE): $1.80 EPS (36.6%) on sales of $6.4 billion (+53.0%)
• Google Inc. (NASDAQ: GOOG): $4.74 EPS (24.9%) on sales of $3.9 billion (+41.6%)
• Nokia Corp. (NYSE: NOK): 56 cents EPS (23.2%) on sales of $19.9 billion (+17.8%)
• CSX Corp. (NYSE: CSX): 90 cents EPS (21.1%) on sales of $2.9 billion (+12.8%)
• Altera Corp. (NASDAQ: ALTR): 27 cents EPS (18.5%) on sales of $346.7 million (+8.4%)
• IBM (NYSE: IBM): $1.82 EPS (+17.6%) on sales of $25.9 billion (+9.0%)
• eBay Inc. (NASDAQ: EBAY): 41 cents EPS (17.1%) on sales of $2.2 billion (+18.0%)
• W.W. Grainger Inc. (NYSE: GWW): $1.46 EPS (17.1%) on sales of $1.7 billion (+8.0%)
• Microsoft Corp. (NASDAQ: MSFT): 47 cents EPS (17.0%) on sales of $15.7 billion (+17.0%)
• Honeywell International Inc. (NYSE: HON): 94 cents EPS (17.0%) on sales of $9.2 billion (+7.9%)

The blood thinner Heparin, used for surgery and dialysis has now killed 81 people in the US. According to The New York Times, "The F.D.A. has identified 12 Chinese companies that have supplied contaminated heparin to 11 countries." The contamination that caused the problems appears to come from manufacturers in China.

The news reopens the question of who is at fault when China ships bad products to the US. Companies like Mattel (NYSE: MAT) and Baxter (NYSE: BAX), a big heparin supplier, would like to blame the Chinese. Alternatively, they could say that the FDA does not have enough inspectors to keep up with drug components imported from the big Asian country.

But all of that is a dodge. Any company that sells a product should ultimately be responsible for that product's safety no matter what the current law says. Baxter makes the money on heparin, why should another entity be responsible for making sure its is safe?

Baxter might argue that it cannot sell heparin at a profit if all of the inspection responsibility falls to it. If so, it should exit the business and leave it to a company that can. All of those people who died would probably agree.

Douglas A. McIntyre is an editor at 247wallst.com

MAJOR PAPERS:

• This year, the International Trade Commission is set to issue rulings on whether Samsung and Nokia Corporation (NYSE: NOK) have infringed patents from InterDigital Inc (NASDAQ: IDCC). If InterDigital, who licenses its patents to iPhone maker Apple Inc (NASDAQ: AAPL), wins, fees from the deals could double its revenue over the next few years, the Wall Street Journal contended.
• The Wall Street Journal also reported that Macy's Inc (NYSE: M) is among the retailers that include The Home Depot Inc (NYSE: HD) and Sears Holdings Corporation (NASDAQ: SHLD) to stop making its monthly disclosure of retail sales.

OTHER PAPERS:

• According to FDA commissioners, the New York Times reported that Baxter International Inc's (NYSE: BAX) critical blood thinner heparin, which has been linked to nearly 20 deaths and whose base was created in China, contained a "possibly counterfeit" ingredient that "mimicked the real drug."
• In his opening arguments in the state of Alaska's lawsuit against Eli Lilly & Company (NYSE: LLY), an attorney for the state alleged the drug maker failed to warn doctors and patients of dangerous side effects associated with its drug Zyprexa, the Associated Press reported.

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.