This Health Care Stock Has Just What the Doctor Ordered

If you've been feeling lousy after a horrid 2022, why not get healthy again using shares of Baxter International ? The firm provides a wide array of health care products and services designed to bring patients back to normal. With BAX now at an extremely depressed valuation, owning the stock could make a big stride in resuscitating your portfolio. The company is a blue-chip name. Stagnant near-term -profits, though, led traders to drag down the shares from a record $95.20 back in 2020, to within pennies of its 6-year low. That selloff was not justified. Since 2016 all major metrics are up nicely, as documented below. Total shares outstanding were reduced by about 6.6%. Annual dividends grew by 132.7%. Total return for continuous shareholders only reflects a portion of the value created. That sets up new buyers with a chance at outsized gains merely seeing BAX regress towards the mean valuation-wise. What is BAX worth? A typical price-to-earnings has run about 23.7-times in the company's current form. Previous best entry points (green starred below) saw rallies develop from starting multiples ranging from 17.4-times to 22.4-times. Baxter's three should have sold moments only took place when the stock reflected higher than average P/Es along with lower than normalized yields. As of Friday, BAX was offered at the lowest P/E and the highest yield since its spin-off of the bio pharmaceutical division on July 1, 2015. All data on the graphic below relate to the company in its present configuration only. Assume a lower than average 20 multiple on BAX's 2023 estimate and $71.60 appears to be a reasonable goal price. Reaching that price will deliver a solid 65.8% total return if it takes a full year to play out. My goal is not far-fetched. BAX peaked between $66.20 and $95.20 during each of the last six calendar years. Baxter's fundamentals remain near all-time highs. Yahoo Finance likes the stock but takes a more conservative view on its year-ahead value. They see BAX rebounding to about $59 by this time next winter. That is predicated on seeing no EPS growth this year and only 16.5-times EPS. Even so, making it to their 12-month target will generate 36.9% in total return. Research from Morningstar is at the high end of most analysts' range. It labels BAX as a 5-star, best buy. Morningstar deigns to provide year-ahead goal prices, but does let us know it sees BAX worth $85 right now. If it proves correct, a gain of almost 94% is within reach. Fast Graphs research falls into middle-ground regarding Baxter. Fast Graphs calls 19.38-times as a typical multiple for the shares based on all past history. Assume only 17-times 2023's EPS expectation and the Dec. 31, 2023 target price becomes $59.67. No matter how you slice and dice Baxter's numbers, there appears to be little downside risk and plenty of upside. Plus, today's buyers are getting 2.64% in current yield while they wait for the market to get wise again concerning Baxter. LEAP options are available out to Jan. 19, 2024 or Jan. 17, 2025. Actual pricing on Baxter's $40 - $50 strike price puts, with the stock at $43.88, are shown below. The most aggressive of the puts are the $50 strike prices. At last week's closing quotes break-even on the January 2024 put would have been just $42. On the January 2025, $50 put break-even dropped to only $40.70. The five-year chart below shows that owning BAX at any of the six if exercised price points illustrated would have been a winning position 100% of the time. BAX spent most of that half-decade meandering between $62 and $90. You rarely get chances to own world-class, high-quality companies like Baxter International at bargain valuations. Don't miss your opportunity to snag some shares or sell some naked puts, while the price is right near a six-year nadir.

This Health Care Stock Has Just What the Doctor Ordered

Revive your portfolio with Baxter International.

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