Markets & Finance

The Best Shots for Hitting Targets


By Michael Kaye, CFA The stocks that carry Standard & Poor's highest investment ranking, 5 STARS (buy), are so designated because our equity analysts believe they have the highest potential to outperform the broader market over the next 6 months to 12 months. But of the 97 stocks with the 5-STARS ranking, which could see the greatest pop?

That's where another S&P investing metric, the 12-month target price, comes in. S&P's 12-month target prices are based principally on a blend of the values derived from using three analytical "bottom-up" approaches:

Intrinsic value: This is based on such resources as S&P's

discounted free-cash-flow model or other quantitative tools

Relative valuation: This compares a stock's valuation to that of its peers and the broader market

Sum-of-the-parts: A measure of a stock's private market value, based on a prospective breakup of the company.

In this week's screen, we started with the list of 5-STARS stocks. Then we looked for those with the largest percentage difference -- at least 40% -- between the current price (as of Nov. 30, 2003) and the S&P 12-month target price.

Here are the nine names that emerged:

Stocks with strong upside potential

Company/ticker

S&P STARS Rank

America West Holdings (AWA)

5

Amgen (AMGN)

5

Analog Devices (ADI)

5

Genzyme (GENZ)

5

Intrado (TRDO)

5

Kaydon (KDN)

5

La Quinta (LQI)

5

Reliant Resources (RRI)

5

Texas Instruments (TXN)

5

Kaye is a portfolio services analyst for Standard & Poor's


Silicon Valley State of Mind
LIMITED-TIME OFFER SUBSCRIBE NOW

(enter your email)
(enter up to 5 email addresses, separated by commas)

Max 250 characters

Sponsored Financial Commentaries

Sponsored Links

Buy a link now!

 
blog comments powered by Disqus