; recent price: $70) to the portfolio, replacing BJ Services (BJS
Liker all stocks in the S&P Top 10, Cooper carries S&P's top investment ranking, 5 STARS (buy). While it has exited the portfolio, BJ Services retains its 5-STARS recommendation.
Our continued enthusiasm for Cooper reflects its strong market position -- around 30% -- in the U.S. specialty eye-care market, which we think is experiencing solid demographic-fueled growth. S&P views Cooper's proposed acquisition of unranked Ocular Sciences (OCLR
; $44) as a good strategic fit, particularly with Ocular's strength in Japan.
We believe Cooper's projected solid revenue growth and high margins justify the stock's premium valuation of 27 times our fiscal 2004 (ending October) earnings per share estimate of $2.61. Our target price on Cooper is $86, or 26 times our $3.30 estimate for fiscal 2005.
Year-to-date through October 31, 2004, the Top 10 has gained 10.6%, vs. a gain of 3.1% for the S&P 500 index on a total return basis.
Here's the latest list:
S&P TOP 10 PORTFOLIO
Price (11/9/04 close)
Strong market share, rising shipping volume
Strong consumer product portfolio
See gain in market share
Improving profit outlook
Expected improvements in several end markets
High returns on assets and equity
Strength in consumer lending
Improving outlook for chipset demand
For more information about the Top 10 portfolio, please visit http://www.businessweek.com/investor/content/jun2002/pi20020617_8998.htm Shea is director of global equity research, and Gold and Biggar are senior portfolio group analysts, for Standard & Poor's Equity Research