BOSTON (

TheStreet

) -- U.S. indices posted modest declines yesterday, but a few health care stocks hit 52-week highs.

5. Health Net

(HNT)

rose 3.6% to $21.45. Yesterday, the insurer postponed its annual investor day because of the sale of its Northeast operations and the government's effort to reform health care.

Our take

: We rate Health Net "hold." Health Net swung to a third-quarter loss of $66 million, or 64 cents a share, from a profit of $18 million, or 17 cents a share, in the year-earlier period. Revenue grew 4% to $3.9 billion. Health Net's gross margin rose from 12% to 13%, and its operating margin increased from 1% to 3%. The company has $1.7 billion of cash and $618 million of debt. But erratic operating results and regulatory reform are paramount concerns.

4. Analog Devices

(ADI) - Get Report

jumped 6.4% to $29.74. On Monday, the chipmaker beat fiscal fourth-quarter earnings expectations.

Our take

: We rate Analog Devices "buy." Fiscal fourth-quarter profit dropped 27% to $106 million, or 36 cents a share, as revenue decreased 13% to $572 million. The company's gross margin fell from 67% to 61%, and its operating margin declined from 25% to 22%. Analog Devices has an ideal financial position, with $1.8 billion of cash and minimal debt. Analog Devices sells at a discount to peers on trailing and projected earnings.

3. Stryker

(SYK) - Get Report

advanced 1% to $50. The maker of specialty medical products said it would acquire privately held OtisMed, a software company.

Our take

: We rate Stryker "buy." Third-quarter net income dropped 16% to $229 million, or 57 cents a share. Revenue remained steady at $1.7 billion. Stryker's gross margin was little changed at 70%, but its operating margin climbed from 22% to 23%. Stryker has an ideal financial position, with $2.9 billion of cash and $18 million of debt. Stryker is cheaper than health care equipment peers based on all of our valuation measures.

2. Covidien

(COV)

rallied 1.4% to $46.80. On Friday, the drugmaker said the Food and Drug Administration would extend the review period for its painkiller Exalgo.

Our take

: We rate Covidien "buy." Fiscal fourth-quarter profit plummeted 86% to $56 million, or 11 cents a share. Revenue grew 5% to $2.7 billion. Covidien's gross margin dropped from 59% to 53%, and its operating margin fell from 21% to 17%. We give the company a financial strength score 6.9 out of 10, less than the "buy"-list average due to deteriorating margins. Covidien stock sells at a discount to peers on trailing earnings, projected earnings and sales.

1. Novartis

(NVS) - Get Report

increased 1% to $55.30. The Swiss drugmaker has opened a factory that will make vaccines that prevent the H1N1 flu virus.

Our take

: We rate Novartis "buy." Third-quarter profit remained steady at $2.1 billion, or 92 cents a share, as revenue rose 3% to $11 billion. Novartis's gross margin was little changed at 72%, but its operating margin climbed from 22% to 25%. We give Novartis a financial strength score of 9.4 out of 10 because of its consistent operating results and $14 billion of cash. Novartis is cheaper than pharmaceutical peers based on earnings, book value, sales and cash flow.