Agilent Technologies Inc. $19 - New York symbol A

AGILENT TECHNOLOGIES INC. $19 (New York symbol A; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 350.0 million; Market cap: $6.7 billion; WSSF Rating: Average) makes testing systems that help manufacturers improve the quality of electronic products such as cellphones. In the past few years, Agilent has expanded its Bio-Analytical Measurement division, which supplies measurement equipment to medical research labs and drug developers. This business now accounts for 40% of Agilent’s total sales. It’s also much less cyclical than the electronics division, which helps cut Agilent’s risk. In the fiscal year ended October 31, 2008, Agilent’s earnings rose 15.5%, to $729 million from $631 million in the prior year. Earnings per share grew 26.5%, to $1.96 from $1.55, on fewer shares outstanding. These figures exclude restructuring and other unusual items. Revenue rose 6.5%, to $5.8 billion from $5.4 billion. Agilent spent $704 million (12.2% of revenue) on research in fiscal 2008, up 2.8% from $685 million (12.6% of revenue) in fiscal 2007. Thanks to this spending, Agilent has developed a new test for melamine in food following several cases of contamination in China. In sufficient amounts, melamine can lead to kidney failure. Growing concern over food safety standards in developing countries should spur strong demand for these systems. Agilent has cash of $1.4 billion or $4.08 a share, so it can continue to invest in research or make acquisitions. Long-term debt of $1.5 billion is also a reasonable 22% of its market cap. Agilent’s earnings in fiscal 2009 will likely grow to around $1.95 a share, and the stock trades at 9.7 times that forecast. Agilent is a buy.

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