Should You Invest in Abbott Labs?

A number of analysts and hedge funds are maintaining or increasing their estimation of health care titan Abbott Labs.For example,Deutsche Bank reaffirmed its buy on the stock on 19 March;BTIG Research reaffirmed its buy rating on 26 April;Credit Suisse reaffirmed on 17 April;Wells Fargo reaffirmed on 28 April,as did Jefferies Group.Overall,there were six holds and 18 buys on the stock,as well as one strong buy.*
Among the hedge funds,Neuberger Berman increased its Abbott holdings by 9.7% in Q4;DNB Asset Management hiked its Abbott holdings by 69.7%;and Cambiar Investors LLC raised its stake in Abbott by 4.6% in Q4.*
Abbott Labs was founded in 1888 by physician and drug store owner Wallace C. Abbott (People's Drug Store,Chicago),who eventually began manufacturing drugs himself.Today it employs about 73,000 in more than 150 countries.Its four operating segments and some of their products are Nutrition (Similac,Ensure,Glucerna,PediaSure);Medical Devices (glucose monitoring and laser vision-correction technologies);Diagnostics (immunoassay diagnostics,blood screening,bedside testing and companion diagnostics);and Pharmaceuticals (branded generic medications for pervasive and persistent health conditions outside the US only).*
Abbott Labs recently acquired medical device maker St.Jude Medical for 25 billion dollars-its largest ever acquisition-on the desire to gain bargaining power with hospitals.The company paid a 2.67% dividend as of Friday.It scored a double beat on Q1 earnings.Earnings per share were 0.41 versus an estimate of 0.39;revenue was 4.9 billion dollars versus the 4.77 billion estimate. *
Abbott Laboratories (ABT)

Asia This Day:Gold's Second Half Outlook

Samsung is going shopping.The Korean electronics titan is looking to acquire medical device makers.It wants to challenge the likes of GE and Siemens in the industry.
Asians are shopping for gold.India and China are bidding up the price of the precious metal.
Both gold jewelry and bullion are in demand,the latter as security in uncertain economic times.The Indian middle class will continue lifting sales in the second half at the Mumbai bazaar.The wedding season in August will contribute to the increase.
China's property controls have slowed growth in the big cities.Now Beijing is imposing such measures in the smaller ones.According to the Xinhua news agency,Q2 residential land price appreciation slowed.Credit Suisse believes that home inventories are so high,owners will have to cut prices.
Asian shares were mixed Monday morning.Hong Kong,Tokyo and Singapore stocks rose,while Shanghai,Seoul and Sydney issues retreated.
Hong Kong saw scattered clouds Monday.It was 82F,with the humidity at 84%.Winds were W at 8 mph,and thunderstorms were in the forecast.

Asia This Day

Asian markets were largely gainers this morning,Monday,on hopes that the European debt crisis is easing and some positive U.S. retail sales data.The Australian ASX 200 was up 20.00,while Hong Kong's Hang Seng Index rose 151.64 and Japan's Nikkei 225 gained 55.44.Singapore's Straits Times Index was up 23.12.
The Chinese economy faces a sluggish landing,according to Credit Suisse.The existing homes market cooled off in May on government measures to rein it in.Chinese stocks have fallen to 9-month lows on the economic uncertainty.
In Japan,the trade deficit rose more than expected to 853.7 billion yen.Imports were up 12.3,and exports fell 10.3.This is because of continued supply chain disruption from the March 11 earthquake and tsunami.
New Zealand,however,greeted positive economic news this morning.Manufacturing volumes were up 1.9.As well,the services industry expanded at a faster pace in May.
Hong Kong was a toasty 90F on Monday under scattered clouds.The winds were NE at 8 mph,and the humidity was 62%.

Advantage View:Best Dividend Sectors

In 2010,stocks with the lower yields fared best,says Pankaj Patel,Managing Director for Quantitative Strategy at Credit Suisse.This should reverse in 2011.
The formula is to combine high yield and low payout ratio.That means yields greater than 1.5% and payout ratios less than 50%.Sectors with such a good current profile include consumer staples,health care,industrials,materials and energy,in Mr.Patel's opinion.
A low payout ratio indicates a good prospect of a company continuing to pay a dividend for an extended period.
From its 450 offices,Credit Suisse provides Private Banking,Investment Banking and Asset Management around the clock worldwide to corporate,institutional and affluent individual clients.It is also a retail bank in Switzerland.
Credit Suisse(CS)

The Key Investor Question

For a financial advisor,the key is what investors are seeking.Doug Cliggott,Chief Equity Strategist at Credit Suisse,says CS is looking at a society that's getting older.They think it makes sense that investors are seeking less risk.The kind of high yield,low beta equities investors need are names such as AT&T,Pfizer,PepsiCo and McDonald's.
We need to alter our structure of taxation.We need plant and equipment investing.Companies aren't investing because there's no growth.Who isn't frustrated?We're about the same place we were 12 months ago,but with extraordinary volatility.In that world,it makes sense that people are seeking the perceived security of the bond market.That's why CS recommends low volatility stocks with good yields.
A year from now,we could well be where we are right now.Earnings next year could be where we are this year.It's a dangerous,high risk environment,Doug Cliggott believes.
Credit Suisse(CS),AT&T(T),Pfizer(PFE),PepsiCo(PEP),McDonald's(MCD)

A Joint Response

Money Center banks have pooled their resources to ease the financial crisis.An international consortium of 10 of the big banks,including Citigroup(C),Barclays(BCS),Credit Suisse(CS) and Deutsche Bank(DB), have each put seven billion dollars U.S. into the fund.Any of them are allowed to borrow up to a third of the 70 billion to shore up their balance sheets and avoid ratings downgrades.

Grappling With The Bear

Financial advisors are busy grappling with the economic bear.Extreme volatility may occur this week as the markets react to the Federal Reserve's interest rate decision on Wednesday and the employment report on Friday,as well as other data.Jessica Paige of Paige Capital Management advises staying in cash.The debt market is in a crisis,and many companies will file for bankruptcy.One that has already done so is Quebecor World(QBRWF),a Montreal-based printing concern.The company,which prints textbooks,books of the month,catalogs and pamphlets,cites a need to restructure itself.Local management in Fairfield,Pennsylvania says they will not be reducing staff or cutting wages and benefits.The firm has secured one billion dollars U.S. in financing from Morgan Stanley(MS) and Credit Suisse(CS).Ms. Paige observes the market is going through a transition phase right now.Anything you want to buy will be cheaper in six months.The S and P 500 index will drop to 1200 within 6-12 months.Robert Hormats of Goldman Sachs(GS) notes that the economy is heavily in debt-much of it bad.Decoupling of other economies from the U.S. economy hasn't happened.The financial and goods markets of the U.S. are very important to other countries.It is hard for them to grow robustly without the U.S. markets.Economist Ben Stein feels the market was ridiculously oversold by hedge fund traders.They are making a fortune by shorting the market.Three hundred trillion has been knocked out of the market.Federal Reserve chairman Ben Bernanke needs to fight them and be as ruthless as they are.Jim Awad of J.P. Stewart Asset Management says that it is the most volatile market in his forty years in the business.There is a fear of more write-downs,and it will take time to get over that.According to Joe Battipaglia of Stifel Nicolaus,the corrective process is well underway,but you still have to work through the credit mark-downs.We are one-third of the way through.The process has to unfold naturally.While this goes on,some investors are sheltering in tax-free money market funds such as Alpine Municipal MMF/Investor and Vanguard Tax-Exempt MMF.

Alcatel-Lucent Upgraded

Alcatel-Lucent(ALU),the Franco-American telecom colossus,has been upgraded to "outperform" by Credit Suisse.ALU's first quarter as a merged corporation was a difficult one.Although the company sustained a net loss of 8 million euros(10.8 million dollars),its cost-cutting plans impressed Credit Suisse.Alcatel-Lucent is one of the most actively traded stocks.Its CEO,Patricia Russo,sees revenue growth for the rest of the year,based on a good flow of orders.