By Andrew Tanzer
Kiplinger's Personal Finance
Sunday, September 20, 2009

A thick cloud of political uncertainty has been covering health-care stocks. At the core of the issue: Some reform of the health-care system seems likely, but will the high cost and record federal deficits keep President Obama from getting what he wants?

For investors: Given such uncertainty, does it make sense to invest in health-care stocks before the dust settles? Here are six health-care stocks that are reasonable values in this murky environment.

No matter the outcome of reform, generic drugs should benefit. Whether the government, employer or consumer is doing the spending, low-cost generics have an advantage. Over the next five years, $150 billion worth of pharmaceuticals are scheduled to come off patent, which means they're fair game for makers of generic drugs.

That's all good news for Teva Pharmaceutical, the world's largest generic-drug maker. Standard & Poor's expects Teva to compound earnings by 17 percent annually over the next three years. Teva sells for 15 times estimated 2009 earnings of $3.33 a share.

Teva's largest competitor in generics is Sandoz, a division of Switzerland's Novartis. Novartis has a particularly productive research lab. The stock yields 3.6 percent and, at $47.80, sells for almost 14 times projected 2009 earnings of $3.54 a share.

Perhaps the most diversified company in the industry is venerable Johnson & Johnson. It is a dividend-growth champ that yields 3.2 percent. The company is consistent, highly profitable and, at $60.15, sells for just 13 times earnings.

Also, look at Covance, which serves drugmakers such as Eli Lilly, and Charles River, renowned for its business of breeding rats and mice for research.

Finally, sales at CVS should reach $97 billion this year, and, at $36.44, the stock trades for 14 times the earnings forecast of $2.60 per share