MAY 26, 2006



Stock Screens

By Michael Kaye, CFA


Stalwart Stocks in a Struggling Market

As recent declines add new uncertainties to an already tense investing climate, S&P names 10 issues with broad signs of strength


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From Standard & Poor's Equity Research


After a strong start to the year, it hasn't exactly been a merry month of May for major stock indexes. The Standard & Poor's 500-stock index is down 3.3% for the month, as investors fret about a variety of things: economic growth, inflation, interest rates, commodity prices -- you name it.

Amid the declines, which stocks have been holding up well? And which of those should investors be looking at? That's the theme of this week's screen. We started by looking for those issues with positive momentum: a 13-week relative strength ranking of 90 or better, based on S&P's proprietary measure. That places their performance in the top 10% of stocks over that time.

STARWORTHY.  We also wanted to find other signs of strength. We next sifted for those issues with the most favorable rating according to S&P's proprietary technical-investing model.

Then, we turned to our analysts. To make sure the names on our list had good potential for further capital appreciation, we filtered for those with S&P investment rankings of 4 STARS (buy) or 5 STARS (strong buy) from S&P equity analysts. Stocks with those designations are expected to outperform the broader market over the next 6 to 12 months.

In addition, in order to avoid speculative issues, the screen was limited to stocks with market capitalizations above $1 billion and a per-share price above $5.00. When we ran the numbers, these 10 stocks emerged:

CompanyTickerS&P STARS Rank
American Eagle OutfittersAEOS4
Archer-Daniels-MidlandADM4
BT GroupBT4
Disney (Walt)DIS4
FMC TechnologiesFTI4
Four Seasons HotelFS4
ImClone SystemsIMCL4
Kohl'sKSS4
TXU Corp.TXU4
Tyson FoodsTSN4



Kaye, an analyst for Standard & Poor's Portfolio Services, is the author of The Standard & Poor's Guide to Selecting Stocks


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.
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