BW Online | December 31, 2001 | S&P Analysts' Top Stock Picks for 2002

BW MAGAZINE Get Four Free Issues Register Subscribe Customer Service

ONLINE FEATURES Book Reviews BW Video Columnists Interactive Gallery Newsletters Past Covers Philanthropy Podcasts Special Reports BLOGS Auto Beat Bangalore Tigers Blogspotting Brand New Day Byte of the Apple Economics Unbound Eye on Asia Fine On Media Green Biz Hot Property Investing Insights Management IQ NEXT: Innovation NussbaumOnDesign Tech Beat Working Parents TECHNOLOGY J.D. Power Ratings Product Reviews Tech Stats Wildstrom: Tech Maven AUTOS Home Page Auto Reviews Classic Cars Car Care & Safety Hybrids INNOVATION
& DESIGN Home Page Architecture Brand Equity Auto Design Game Room SMALLBIZ Smart Answers Success Stories Today's Tip INVESTING Investing: Europe Annual Reports BW 50 S&P Picks & Pans Stock Screeners Free S&P Stock Report SCOREBOARDS Hot Growth 100 Mutual Funds Info Tech 100 S&P 500 B-SCHOOLS Undergrad Programs MBA Blogs MBA Profiles MBA Rankings Who's Hiring Grads

BW EXTRAS BW Digital BW Mobile BW Online Alerts Dashboard Widgets Podcasts RSS

RSS Feeds

Reprints/ Permissions Conferences Research Services

DECEMBER 31, 2001

MARKET VIEWS
By Ken Shea

S&P Analysts' Top Stock Picks for 2002

The PowerPicks 2002 portfolio includes a good sampling of technology, healthcare, consumer, and financial issues

Ken Shea is equity research director for Standard & Poor's

STORY TOOLS

Search for business contacts:

PREMIUM SEARCH
Search by job title, geography and build a list of executive contacts

It's time once again to announce this year's lineup for the Standard & Poor's PowerPicks Portfolio. The Portfolio represents the collective "best ideas" of the Standard & Poor's equity research staff.

Each of the 35 industry analysts on S&P's equity research staff has chosen one of the stocks they follow as the best-positioned for superior growth. The S&P PowerPicks 2002 Portfolio is diversified across all the 10 S&P economic sectors comprising the S&P 500 index.

The portfolio will be a "frozen" one, meaning that it will undergo no changes throughout the entire year. The objective of the portfolio is to exceed the total return (capital appreciation plus dividends paid) generated by the S&P 500 during the year.

The median capitalization of the S&P PowerPicks 2002 Portfolio is approximately $5 billion, ranging from a high of $209 billion for American International Group to a low of $500 million for Steel Dynamics. By contrast, the median market capitalization of the S&P 500 index is approximately $8.3 billion, ranging from a high of $432 billion for General Electric to a low of $675 million for McDermott International. The S&P PowerPicks 2002 Portfolio is comprised of 17 stocks considered to be large capitalization issues (market cap above $5 billion), 15 mid-cap issues ($1 billion to $4.99 billion), and three small-cap issues (below $1 billion).

The heaviest S&P sector representations within this year's PowerPicks are Information Technology, Health Care, Financials, and Consumer Discretionary, which together comprise nearly two-thirds of the total portfolio's issues. The S&P PowerPicks Portfolio concept was initiated on January 1, 1997. Since inception, the S&P PowerPicks Portfolio cumulative total return performance through November 30, 2001 was +86.9%, versus +64.5% for the S&P 500 index (both including dividends).

Year-to-date through November 30, the S&P PowerPicks 2001 portfolio total return was �14.5%, versus �12.7% for the S&P 500 index (both including dividends).

Here is the roster for the S&P PowerPicks 2002 Portfolio:

Company	Mkt Cap $Bil.	Investment Rationale
American International Group	209.1	Improving property-casualty premium rates
Ameripath	0.9	Strong demand for biopsy testing
Andrx Corp.	4.9	Strong drug product pipeline
Biomet	7.8	Leader in orthopedic devices enjoying robust growth
Cephalon	3.4	Growth in sales of Provigil neurological disorder treatment
Chico's FAS	1	Successfully leveraging its women's casual clothing market niche
ChoicePoint	3.1	Increased need for risk assessment services
Constellation Brands	1.8	Improving product mix seen fueling mid-teen EPS growth
Cooper Industries	3.2	Seen as beneficiary of improving economy. 3%+ yield, takeover kicker
DoubleClick	1.5	Improvement in online advertising market
Fedex Corp.	14.3	Ground business seen picking up as economy strengthens
FEI Co.	1	Strong demand for ion and electron-beam microscopes
FleetBoston Financial	38.7	Expected improvement in improved equity market environment
Flextronics	12.5	Improving demand for outsource manufacturing
Fortune Brands	5.8	Steady EPS grower seen benefiting from recovery in home improvement division
Global Santa Fe	4.7	World's second largest offshore driller increasing market presence.
IBM	207	Capitalizing on growing trend toward e-business solution deployments
IMC Global	1.5	More focused product mix, recovering fertilizers industry conditions
IndyMac Bancorp	1.3	Rising market share of fragmented mortgage lending industry
Kaydon	0.6	Diversified industrial products company seen beneficiary of improving economy
Kinder Morgan	5.6	Owner of attractive gas pipeline assets seen benefiting from improved prices
MBNA Corp.	28.1	Anticipated rebound in consumer spending, lower funding costs
Microchip Technology	5.3	Maker of microcontrollers seen benefiting from industry upturn in '02
Moody's	5.7	Favorable interest rate envionment, attractive business model
Nextel Communications	8.3	Attractive valuation relative to wireless carrier peers
Pactiv Corp.	2.8	Improving packaging product demand
Park Place Entertainment	2.4	See improved gaming industry conditions, rising free cash flow
Peregrine Systems	3	See growing demand for co.'s infrastructure resource management
Quest Diagnostics	6.3	Favorable demographic trends for diagnostic testing
Sears, Roebuck	14.7	Streamlining product mix, low valuation
Siebel Systems	11.5	New Siebel 7 product release seen spurring growth
Steel Dynamics	0.5	Low cost minimill seen benefiting from reduced steel industry capacity
TXU Corp.	11.9	Regulated electic utility generating good, steady EPS growth, 5% yield
Tyco International	108.5	Focus on recurring and service revenues generating steady EPS gains
UTStarcom	3	Robust capital spending growth in China's telecom market

Shea is equity research director for Standard & Poor's

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.

Get BusinessWeek directly on your desktop with our RSS feeds. XML

Add BusinessWeek news to your Web site with our headline feed.

Click to buy an e-print or reprint of a BusinessWeek or BusinessWeek Online story or video.

To subscribe online to BusinessWeek magazine, please click here.

Learn more, go to the BusinessWeekOnline home page