Big pharmaceutical stocks are especially cheap; the drug makers also have lots of cash and pay fat dividends. But their long-term prospects are uncertain, due to looming patent expirations on blockbuster drugs that have been profit engines for many companies. Among the drugs approaching patent expiration in 2011 is Lipitor, Pfizer 's (PFE) cholesterol drug, whose global sales totaled nearly $13 billion last year.

Investors also have shunned managed care, with the result that stocks such as UnitedHealth (UNH) fetch single-digit P/Es. That has put them on the radar of some value managers. But the group could be vulnerable if the Obama White House pushes a national health-insurance program through Congress, notes Matthew Willey, a health-care analyst at money manager Franklin Templeton.

Baxter International (BAX), C.R. Bard (BCR), Teva Pharmaceutical (TEVA) and Express Scripts (ESRX) are four health-care stocks likely to outperform in the coming year, even if the global economy remains depressed. The company's geographic reach makes it less dependent on conditions in any one region. Baxter has "good earnings visibility, with little economic sensitivity," says Lai. "They have become less of a distributor of medical equipment like IV supplies, and more of an innovator." Behind that shift is Baxter's bioscience division, whose third-quarter revenue grew 23%, to $1.3 billion. Its products include plasma-based proteins used to treat hemophilia. Another promising area: recombinants, which are produced synthetically, not from human blood, and are used to treat immune disorders. Recombinant sales totaled $516 million in the quarter, versus $432 million a year before. "Between the therapies they have for hemophilia and immune-system-deficient patients, that's a very good market," says Willey. Baxter is also benefiting from a favorable shift in its product mix, as the fastest growth is coming from its more profitable products in biosciences.

C.R' Bard, which makes medical, surgical, diagnostic and patient-care products from catheters to IV systems, also looks solid. "They have more than 10,000 products, but there is no single product they will either live or die by," says Willey, who describes the company's products as "mid-tech." "These aren't heart-replacement or cardiac implants," he says. "The vast majority of what they sell is not part of the hospital's capital budget; [it's] part of the operating budget, and that's a good thing in this environment." Bard earned $1.09 a share in the third quarter, versus 96 cents a share 12 months earlier, on net sales of nearly $617 million -- up 13%. Its international business, currently about 32% of sales, is growing. And two of its largest sales categories, vascular and oncology, each posted 20% growth in net sales. Offerings include stents and catheters as well as biopsy products. The shares trade at about 15 times the $5.06 analysts expect Bard to earn next year, below its median forward price/earnings ratio of 21.5.

Shares of Jerusalem-based Teva have dropped about 16% from their 52-week high of 50, set in January. The stock traded last week around 14 times consensus 2009 profit estimates of $3.04 a share, versus a median forward P/E multiple of nearly 18. As our colleague Fleming Meeks pointed out in a story on Aug. 29 in Barron's Daily Stock Alert, Teva is well fortified, and insulated from the politics of health care, however that might unfold. Generic drugs will remain important. Also, as of Sept. 30, the company's cash balance was $2.8 billion, giving it plenty of flexibility and liquidity. And Teva isn't only a play on generics. Its branded drugs include Copaxone, which treats multiple sclerosis and whose global third-quarter sales were $562 million, up 28% year over year.

A PBM manages prescription-drug benefits for health insurers and employers, negotiating prices with pharmacy networks and drug makers. Unlike Medco (MHS) or CVS (CVS), which target large companies, Express Scripts focuses more on medium-sized companies. "That market has been somewhat less competitive, because you have one primary player rather than two," says Willey of Franklin Templeton. Express Scripts' shares fetch about 14 times their consensus '09 profit estimate of $3.68 a share, compared with a median forward multiple of about 20 times. With the stock market tumbling to five-year lows, Express Scripts, along with Baxter, Bard and Teva, could provide some needed relief to investors' portfolios.