ABT Shows Earnings Matter

One of my favorite stocks, Abbott Laboratories (ABT), released a great quarterly report before the market opened, and has been rising all morning as a result. I’ve said it before and I’ll say it again: Following stocks with strong earnings is the only way to profit in this difficult market.

ABT is proof of that, but look at the market in general for a better indicator of the importance of earnings. Wall Street has bounced back today from yesterday’s deep decline, thanks in part to IBM’s strong earnings report that beat expectations. IBM is seen as an indicator of the entire tech sector, and a strong report has bolstered investor confidence.

As you can see, earnings matter. They are a very important indicator of a stock’s health. Abbott Laboratories posted a 28% jump in fourth-quarter net income, reporting earnings of $1.54 billion or 98 cents a share, compared with $1.2 billion or 77 cents a share a year earlier. Looking ahead, Abbott confirmed its projection made two weeks ago for 2009 earnings, of $3.65 to $3.70 a share. Those are great numbers, and should make any investor feel good about getting behind this stock.

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