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Stocks in this article: JENSX MSFT PEP ORCL TROW ABT

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Abbott Laboratories (ABT)

Company Profile: Abbott Labs is engaged in the discovery, development, manufacture, and sale of a broad and diversified line of health care products.

1-Year Total Return: -12%

Schoenstein's Take: In whittling down the list of possible investment ideas, Schoenstein says the Jensen Portfolio looks for companies with recurring revenue streams -- something that protects against real downturns -- as well as something in the business that gives a company an advantage over their competition, assuming they're investing in those advantages that they've created. In the healthcare space, which represents 21.4% of the portfolio, that is found in patent protection.

Abbott Labs, at a portfolio weighting of 4.3%, isn't the largest health-care position the portfolio has but it has the most attractive characteristics. As they pertain to Abbott, there are competitive barriers to entry in the pharmaceutical space, plus patent protection in the device space, Schoenstein says.

"They've got good device products, like stents, which have been quite well received," he says. "But you also have nutritionals, which has a strong platform here in the U.S. that they are taking to emerging markets. There is also the idea that pharmaceuticals have to be the branded, patented ones. Branded generics can be very powerful growth engines for companies like Abbott."

In addition to targeting the key baby-boomer demographic, which is reaching the retirement age and is taking advantage of healthcare to live longer and healthier lives, Abbott offers investors exposure to emerging markets.

"You're seeing people consuming healthcare in order to improve the quality of their lives," Schoenstein says. " Abbott has been making acquisitions in countries like India, where they are acquiring branded generics that they can offer at a lower-price point to emerging market populations."

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