BAXTER INTERNATIONAL INC. $39

BAXTER INTERNATIONAL INC. $39(New York symbol BAX; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 547.0 million; Market cap: $21.3 billion; Price-to-sales ratio: 2.1; Dividend yield: 1.2%; TSINetwork Rating: Average; www.baxter.com) earned $755 million, or $1.38 a share, in 2015 before unusual items. That’s up 7.5% from $702 million, or $1.28, in 2014. Revenue fell 7.0%, to $10.0 billion from $10.7 billion. However, without the negative impact of currency exchange rates, revenue gained 3%. The company continues to spend about 6% of its revenue on research. That has let it launch several successful new products, including its Sigma Spectrum pump for injecting drugs and fluids into a hospital patient. New products like this should lift Baxter’s revenue in 2016 by 3% to 4%. In addition, cost cuts will help push up earnings to $1.50 a share. The stock trades at 26.0 times that estimate. That’s an acceptable multiple, considering Baxter’s strong reputation and its high research costs. The $0.46 dividend yields 1.2%. Baxter is a buy.

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