Two Healthy Stocks at Bargain Prices

10/27/2008 12:30 pm EST

Focus: STOCKS

Louis Navellier

Editor, Blue Chip Growth and Emerging Growth

Louis Navellier, editor of Blue Chip Growth, finds two strong performers he thinks will shine in a market rebound.

As the market twists and turns, the important thing to remember is that as long as our companies continue to show strong fundamentals—such as healthy profit margins, growing earnings, and substantial sales increases—we know that they have what it takes to succeed in this market.

Right now, while the rest of the market is looking for a rock to hide under, we're positioning ourselves to cash in from Wall Street's resurgence. I am convinced that we're bouncing along the bottom of the market right now, and it's only a matter of time before investors look for healthy stocks are trading at bargain prices.

Abbott Laboratories (NYSE: ABT) is one of the top health care products makers in the US and helps millions of people around the world live healthier, more productive lives. It's hard to find someone who doesn't use Abbott products—from infants who rely on its Similac formula for nutrition to seniors who take its arthritis medication Norvir. Abbott Labs sells its products in more than 130 countries through affiliates and distributors, and has the benefit of a truly global reach.

On October 15th, Abbott weathered the 730-point drop in the Dow with a modest 1.6% decline after reporting earnings. The company's quarterly profits jumped 51% and blew away Wall Street expectations by 50%! Even better, the company boosted earnings guidance for the rest of the year—on a day when the rest of the market was worried that the sky was falling!

The future for Abbott is bright after recently winning an important patent extension on the technology behind a widely used stent delivery system. The stock is clearly an outstanding Buy. (It closed Friday above $54—Editor.)

Public Storage (NYSE: PSA) is one of the largest self-storage companies in the US. Not a glamorous business, to be sure, but think of the meager overhead and massive profit margins a well-run storage operation could have. All you have to do is buy the land, pour some concrete, and collect the rent!

PSA is a lean operation, but a big one. With interests in more than 2,100 storage facilities comprising some 145 million square feet of storage space in nearly 40 states and Europe, Public Storage has the economy of scale we're looking for. To sweeten its bottom line, Public Storage also rents trucks and portable self-storage units, as well as selling locks, boxes and packing supplies.

The company's second-quarter earnings doubled to $133.8 million, or 40 cents per share, compared with $77.1 million or eight cents per share in the same quarter a year ago! In addition, Public Storage has a strong credit position with $3.5 billion preferred equity and debt of less than $700 million—all of which can be repaid with their retained cash flow! You'd be hard-pressed to find a better buy amid the credit crisis. (It closed Friday above $70—Editor.)

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