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Get Four
|  | AUGUST 20, 2004
 STOCK SCREENS By Numer de Guia, CFA Going Against the Flow S&P's latest screen finds strong stocks that tend to move in the opposite direction from the overall market When stocks are choppy and volatile, investors may wish to seek out issues with a lower level of risk than the overall market. One widely used gauge of a stock's risk is its beta -- a measure of the volatility of a stock relative to the overall market. Standard & Poor's stock betas are computed by data provider Compustat and are available for all U.S. stocks for which a five-year trading history has been compiled. Sixty month-end prices are used for the calculations, which are unlevered (i.e., not smoothed to eliminate any sharp, sudden changes). Dividends paid are included in S&P's beta calculations. The S&P 500-stock index is used as a proxy for "the market as a whole." Here's how it works: An issue with a beta of 1.5 tends to move 50% more than the total market, in the same direction. An issue with a beta of 0.5 tends to move 50% less. If a stock moved exactly as the market moved, it would have a beta of 1. High beta is typical of a volatile stock. Low beta is typical of one that moves less than the market as a whole. STARS-STUDDED. A stock with a negative beta moves in the direction opposite to that of the market. With a beta of -1 a stock has the same volatility as the market, but tends to rise when the market falls, and vice versa. And amid the current equity-market weakness, it's that countertendency that inspired this week's screen. We started by searching our database for issues with beta values less than zero. And to make sure that we uncovered attractive candidates from that list, we sifted for two other criteria. First, we looked for issues with S&P's highest investment rankings: 4 STARS (accumulate) and 5 STARS (buy). That means analysts from Standard & Poor's Equity Research Services expect those stocks to outperform the overall market over the next 6 to 12 months. And as a final kicker, we looked for issues that pay regular dividends. Our screen turned up these 17 names:
 De Guia is an analyst for Standard & Poor's Portfolio Services All of the views expressed in this research report accurately reflect the research analyst's personal views regarding any and all of the subject securities or issuers. No part of analyst compensation was, is or will be, directly or indirectly related to the specific recommendations or views expressed in this research report. Standard & Poor's Regulatory Disclosure Any advice, analysis, or recommendations contained in articles labeled "Insight from Standard & Poor's" reflect the views of Standard & Poor's, which operates separately from and independently of BusinessWeek Online. It is possible that BWOL may from time to time publish information that is not consistent with advice, analysis, or recommendations that are published by Standard & Poor's. Standard & Poor's and BusinessWeek Online are each units of The McGraw-Hill Companies, Inc.
BW MALL
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