Pfizer Inc.

In addition to Pfizer, medical device makers like these three offer another way to profit from aging baby boomers and rising health care spending. However, not all are buys right now. BAXTER INTERNATIONAL INC. $55 (New York symbol BAX; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 556.3 million; Market cap: $30.6 billion; Price-to-sales ratio: 2.2; Dividend yield: 2.4%; TSINetwork Rating: Average; www.baxter.com) makes medical products, such as intravenous pumps and kidney dialysis equipment. It also makes vaccines and drugs. Half of the company’s sales come from single-use products that continually need to be reordered. Baxter earned $569 million in the first quarter of 2012. That’s down 0.2% from $570 million a year earlier. The company spent $575 million on share buybacks during the quarter. Because of fewer shares outstanding, earnings per share rose 3.1%, to $1.01 from $0.98....

PFIZER INC. $23 (New York symbol PFE; Income Portfolio, Manufacturing & Industry sector; Shares outstanding: 7.5 billion; Market cap: $172.5 billion; Price-to-sales ratio: 2.5; Dividend yield: 3.8%; TSINetwork Rating: Above Average; www.pfizer.com) is the world’s largest pharmaceutical drug maker. Its top-selling brands include Lipitor (for high cholesterol), Lyrica (epilepsy), Celebrex (arthritis pain), Viagra (erectile dysfunction), Xalatan (glaucoma), Norvasc (hypertension) and Zyvox (bacterial infections). The company is also the world’s fifth-largest maker of over-the-counter drugs. Its major brands include Advil (pain relief), Centrum (vitamins) and Robitussin (cough syrup).

Pfizer gets about a third of its revenue by selling its products to drug wholesalers. The other two-thirds come from direct sales to retailers, hospitals, clinics and government agencies. Overseas markets supply 60% of its revenue.

Acquisitions added top-selling drugs

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Merck & Co., $38.81, symbol MRK on New York (Shares outstanding: 3.0 billion; Market cap: $116.4 billion; www.merck.com), is a global health care company providing prescription medicines, vaccines, biologic therapies, animal health, and consumer care products. Merck’s top-selling drugs include Singulair (for treating respiratory illnesses), Remicade (arthritis), Zetia and Vytorin (high cholesterol), and Januvia (diabetes). In the three months ended December 31, 2011, Merck’s revenue rose 1.7%, to $12.3 billion from $12.1 billion a year earlier. Excluding one-time items, earnings rose 8.1%, to $3.0 billion from $2.8 billion. Earnings per share rose 10.2%, to $0.97 from $0.88, on fewer shares outstanding. Merck holds cash of $15.0 billion, or $5.00 a share. Its long-term debt of $15.5 billion is a low 13.3% of its market cap....

APPLE INC., $545.18, Nasdaq symbol AAPL, hit an all-time high of $548.21 this week, mainly due to speculation that the company will unveil the next version of its iPad tablet computer, the iPad 3, in the coming days. Apple has sold more than 55 million iPads since it first launched the device in 2010. Even though many of the company’s competitors now sell tablets, iPads still account for over 60% of this fast-growing market. Separately, Apple has recently agreed to let China Telecom sell its new iPhone 4S smartphone; China Telecom is China’s third-largest wireless carrier, with 15 million customers. Apple already sells the iPhone though China Unicom, China’s second-largest carrier. Apple also hopes to work out a deal with China Mobile after it upgrades its systems to handle the iPhone 4S. China Mobile is the country’s largest wireless provider, with 650 million subscribers....

SPDR S&P 500 ETF $132.47 (New York symbol SPY; buy or sell through brokers; www.spdrs.com) holds the stocks in the S&P 500 Index, which consists of 500 major U.S. stocks that are chosen based on their market cap, liquidity and industry group.

The index’s highest-weighted stocks are Apple Inc. ExxonMobil, Microsoft, Procter & Gamble, Wells Fargo & Co., Johnson & Johnson, IBM, Chevron, General Electric, Pfizer Inc., Coca-Cola Co. and AT&T.

The fund’s expenses are just 0.10% of its assets.

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Our view is that virtually all Canadian investors should have 20% to 30% of their portfolios in U.S. stocks, like the ones we recommend in Wall Street Stock Forecaster. We feel now is a good time to hold high-quality U.S. stocks, and we see U.S. dollar exposure as a plus—a valuable form of diversification. Another option is to add some foreign exchange traded funds (ETFs), such as those we recommend in Canadian Wealth Advisor, to your portfolio in reasonable quantities, perhaps 10% of your holdings if you are a conservative investor (including 5% or so in higher-risk funds, such as emerging market ETFs)....

ABB LTD. ADRs, $21.91, New York symbol ABB, has agreed to buy Thomas & Betts Corp. (New York symbol TNB), which makes a range of industrial products, including heating and air conditioning equipment, electrical connectors and transmission towers for power companies. ABB will pay $3.9 billion for Thomas & Betts when the deal closes later this year. To put that in perspective, ABB earned $2.3 billion, or $1.02 per ADR (each American Depositary Receipt represents one ABB common share) in the nine months ended September 30, 2011. This purchase nicely complements ABB’s current lineup of electrical products. As well, Switzerland-based ABB can use Thomas & Betts’ distributors to sell more of its products in the U.S. Moreover, ABB feels that combining purchasing and other overlapping functions could cut its yearly costs by $200 million by 2016....

Exchange traded funds (ETFs) may have a place in your portfolio. That’s because, unlike many other financial innovations, they don’t load you up with heavy management fees or tie you down with high redemption charges if you decide to get out of them. Instead, they give you a low-cost, flexible, convenient alternative to mutual funds. ETFs trade on stock exchanges, just like stocks. Prices are quoted in newspaper stock tables and online. You’ll have to pay brokerage commissions to buy and sell ETFs. However, ETFs’ low management fees still give them a cost advantage over most conventional mutual funds. As well, shares are only added or removed when the underlying index changes. As a result of this low turnover, you won’t incur the regular capital gains bills generated by the yearly distributions most conventional mutual funds pay out to unitholders....

BAXTER INTERNATIONAL INC., $48.08, New York symbol BAX, is buying Synovis Life Technologies Inc. (Nasdaq symbol SYNO), which makes surgical tools and medical patches for wounds and burns. The deal will close in the first quarter of 2012. This purchase looks like a nice fit with Baxter’s existing medical products. As well, Baxter can use its distribution networks to make Synovis’s products available to more consumers, particularly in fast-growing overseas markets. The purchase price is $325 million. However, Synovis holds cash of $65 million, so Baxter is really only paying $260 million. That’s easily affordable for Baxter, which earned $624 million, or $1.09 a share, in the three months ended September 30, 2011....

LIMITED BRANDS INC., $42.61, New York symbol LTD, rose 11% this week, mainly because the company will pay a special dividend of $2.00 a share on December 23, 2011. That’s in addition to its regular quarterly dividend of $0.20 a share, for a 1.9% annualized yield. Limited Brands owns the Victoria’s Secret lingerie chain and the Bath & Body Works personal-care products stores. It also owns the La Senza lingerie chain in Canada. The company also reported that its sales fell 2.3% in November 2011, to $872.6 million from $893.0 million in November 2010. However, that’s mainly because the company recently sold 51% of a business that buys apparel from various manufacturers. On a same-store basis, sales rose 7% during the month....