BUSINESSWEEK ONLINE : MARCH 27, 2000 ISSUE
COVER STORY Follow the Leaders The BW 50 is proving to be a reliable winner. For the third straight year, our list of the 50 hottest companies in the S&P 500 has outperformed the broad indexes of blue-chip stocks. From Mar. 1, 1999, through Mar. 1, 2000, the BW 50 class of 1999 racked up a 29.2% gain. Compare that with the S&P 500's 11.5% increase and the Dow Jones industrial average's 8.7%. Of course, no broad market index could touch the tech-laden Nasdaq composite over the past year. It skyrocketed 108.4%. With that record, we've decided to give our readers a useful new investing tool: the BW 50 index. The index will run each week on the Investment Figures of the Week page. There, readers will be able to track the stock performance of the current year's all stars, so you can watch with us to see how they fare through the next 12 months. There's even more information on our Web site. Go to www.businessweek.com/investor/ for charts that show how the index is faring throughout the day. We'll also have links to S&P'S reports on each company, as well as news stories. The BW 50 lists from past years will also be online, as well as a historical analysis of how our index would have performed under different market conditions. That analysis can be instructive. For instance, it shows that the BW 50, if calculated on a calendar-year basis, would have consistently outperformed the broader S&P 500 in all but two years since 1988, as the roaring bull market focused on growth strategies. But that could shift suddenly. By our calculation, the BW 50 would have trailed the S&P 500 in all but three of the 13 years from 1973 through 1985, when overall stock gains were far more erratic. WEIGHTY ISSUES. Worth noting is that we're also changing how we calculate stock return. In past years, we simply put one share of each company on the list into a basket and tracked the performance of that group. Starting with this year's figures--and in the data that will appear weekly in the magazine--we're weighting the index by market capitalization, so the performances of the biggest players will have a greater impact than those of the upstarts. So what accounted for the strong showing of last year's stars? Not surprisingly, it was driven by red-hot technology stocks. Tech stocks, after all, have dominated the market, accounting for nearly 80% of the S&P 500's gains last year. Oracle Corp. (ORCL), which held the No. 4 spot on the BW 50 both this year and last, was the performance champion, with its stock soaring nearly 300%, thanks to its popular software for Net applications. Close on Oracle's heels was Sun Microsystems Inc. (SUNW), up 292%. Sun's servers are among the hottest tools for making Web traffic fast and reliable. Biotech shares have also sizzled recently. Amgen Inc. (AMGN) delivered stock returns of 118% over the past year, as sales of its anemia drug Epogen hit $1.8 billion. The BW 50 certainly benefited from its heavy weighting in technology, but other big sectors hurt. Drug companies, for example, were clearly out of favor, as investors worried about proposed Medicare changes and looming patent expirations on some major drugs. Woe, as well, to companies that delivered unpleasant surprises. Appliance maker Maytag Corp. (MYG) was the biggest loser of all. Its stock returned a negative 52% over the past 12 months, after two company warnings that it wouldn't meet earnings expectations. Investors are in an unforgiving mood. But because of the great diversity of the BW 50, our winning streak will continue as long as innovative companies keep stepping up to the plate and delivering performance home runs. By Amy Barrett in Philadelphia _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ BACK TO TOP					RELATED ITEMS The 50 Best Performers COVER IMAGE: The BW 50: The Best Performers TABLE: The 50 Best Performers TABLE: Total Return TABLE: Sales TABLE: Net Margin TABLE: Earnings Decline TABLE: Earnings Growth CHART: The Fast-Changing BW 50: A Breakdown by Industry TABLE: Return on Equity Follow the Leaders CHART: Beating the Indexes--Again Great Performances, and How to Spot Them Sifting for Clues TABLE: How to Pan for Gold TABLE: Business Week's Performance Rankings of the S&P 500 (.pdf) TABLE: Business Week's Industry Rankings of the S&P 500 (.pdf) TABLE: Alphabetical Index (.pdf) ONLINE ORIGINAL: Q&A with Biogen's Jim Vincent ONLINE ORIGINAL: Q&A with AOL's Steve Case ONLINE ORIGINAL: Q&A with General Dynamics' Nicholas Chabraja ONLINE ORIGINAL: Q&A with MBNA's Charles Cawley ONLINE ORIGINAL: Q&A with Pfizer's William Steere ONLINE ORIGINAL: Q&A with Kansas City Southern's Landon Rowland ONLINE ORIGINAL: Q&A with Omnicom Group's John Wren INTERACT E-Mail to Business Week Online

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