Now that many consumers and companies are sharply reining in their spending, some say investors' fears of a steep downturn were justified. But have the stocks of some quality companies suffered more than their businesses will? These firms, with healthy balance sheets and good business models, could take off when the economic outlook improves.

Medco Health Solutions (MHS)

Long a growth market, prescription-drug sales slowed down considerably in 2008, according to the health care research group IMS Health, and 2009 might not be much better. That hurt pharmacy benefits manager Medco Health Solutions, a Franklin Lakes, N.J., firm that fills more than 560 million prescriptions a year for insurers, government agencies and corporations. Medco's shares also took a beating on worries that an Obama administration might hurt profit margins by mandating lower prices on prescription drugs.

But analysts say consumers can cut back only so much on prescription spending without risking their health. And now that Medco is trading at about 15 times expected 2009 profits, that risk, along with concern about Obamanomics, could be fully reflected in the stock.

Dentsply (XRAY)

Dentsply, one of the largest manufacturers and distributors of disposable dental equipment, makes drills, X-rays, braces and nearly everything else you see from the dentist chair. Investors sold off the stock over worries that patients will postpone cosmetic dentistry or cut back on regular dental appointments in the U.S. and abroad (about half of Dentsply's sales are from outside the U.S.).

William Jellison, Dentsply's chief financial officer, tells SmartMoney that the world's economic downturn has indeed slowed the dentistry industry's growth from its current 4 to 5 percent annual rate, but he adds that it's still growing as the population ages and more people "are retaining their teeth." Joe Milano of the T. Rowe Price New America Growth fund estimates Dentsply earnings can grow 10 percent in 2009 "unless we have the Great Depression."

Apple (AAPL)

Its products have become so iconic that when many of us hear the word apple, we think iPod or iPhone before we think of the fruit. And that kind of brand recognition has allowed the Cupertino, Calif., technology company to charge hefty prices for its products even as it sells more of them. Analysts note that the firm has a nearly 20 percent operating profit margin, no debt and $24 billion in cash. "They have the premier brand and grow in ways that others can't," says Chris Armbuster, analyst at the Al Frank Fund, which owns Apple shares.

Cisco Systems (CSCO)

Veteran tech investors still have nightmares about seeing their Cisco Systems shares plummet during the technology bust in 2000. When Cisco's shares dropped 30 percent in the fall, investors again feared the worst. But according to some analysts, this time is different. In the tech bust, Cisco found itself with excess routers and other products it couldn't sell because many of its customers had loaded up on its equipment. That crushed the company's profits and forced it to sell brand-new equipment at major discounts.

Today sales growth is slowing around the world, but inventories are in better shape. And with a cash hoard of $27 billion, or $4.60 a share, the Redwood City, Calif., company has flexibility to buy smaller firms and expand its businesses or-gasp-initiate a dividend. A Cisco spokesperson says it has discussed starting a dividend, but that for the time being it will use the cash for acquisitions or other ways to fuel growth.

Read the rest of our annual top picks:

• Where to Invest 2009: The Overview
• Where to Invest 2009: Safer Harbors
• Where to Invest 2009: Higher Risk and Return