) with fast-growing, for-profit education outfit Corinthian Colleges (COCO
Pfizer exited the portfolio after S&P analyst Herman Saftlas downgraded the stock's investment ranking to 4 STARS (accumulate) from 5 STARS (strong buy) on July 25. (All the stocks in the portfolio are ranked 5 STARS.) The downgrade reflected Saftlas' concerns about "macro-regulatory issues" -- drug re-importation and Medicare reimbursement -- along with slowing trends in the statin market, and generic challenges to several key Pfizer drugs.
As for Corinthian, S&P analyst Michael Jaffe notes that the company is benefiting from strong student enrollment at new and existing campuses. Jaffe believes strong top-line growth and
productivity gains will fuel significant earnings per share growth for the foreseeable future. His 12-month target price for Corinthian is $65, derived by applying a 1.5 p-e-to-growth
ratio to S&P's fiscal 2004 EPS estimate of $1.80.
Year-to-date through June 30, the S&P Top Ten portfolio gained 13.69% vs. an advance of 11.76% for its benchmark, the S&P 500-stock index (both of these performances include dividends).
Here's the latest list:S&P Top 10 Portfolio
Boston Scientific (BSX
Explosive growth prospects
Increasing synergies from broadband acquisition
Compass Bancshares (CBSS
Valuation, positive fundamental trends
See extended growth period; undervalued
DR Horton (DHI
Better-than-expected industry trends
Fair Isaac (FIC
Firming business, low valuation
Recovery in worldwide chip demand expected to drive growth
Jacobs Engineering (JEC
See strong bookings from refining customers
Annual revenue growth of nearly 100% seen through fiscal 2004
For more information about the Top 10 portfolio, please visit http://www.businessweek.com/investor/content/jun2002/pi20020617_8998.htm By Ken Shea and Robert Gold