Markets & Finance

Many Happy Returns


By Numer de Guia, CFA Please see the note below regarding changes to Standard & Poor's STARS ranking system.

Most weeks in this column, we use Standard & Poor's Stock Appreciation Ranking System as a key criterion in helping us uncover attractive investing ideas. STARS, as it's more commonly known, is a ranking system based on fundamental research conducted by S&P analysts. Over 1,500 issues receive STARS rankings.

The STARS system's long-term track record speaks for itself. From its inception Dec. 31, 1986, through Oct. 31, 2004, the portfolio of stocks with S&P's highest ranking, 5 STARS (strong buy) posted an aggregate

TOTAL RETURN of 1,316%, vs. a 366.7% return for the Standard & Poor's 500-stock index. What about the shorter-term? Well, thus far in 2004 (through Oct. 31), the gain in the 5-STARS have also topped that of the "500" by a tally of 6.1% to 1.6%.

While that info is nice to know, equity investors probably want some names to go along with the numbers. We're happy to oblige.

Our screen this week is rather basic. S&P equity analysts predicted 12 months ago that the 22 stocks listed below would outperform the market, as all of them were ranked 5 STARS back in October, 2003.

Flash forward one year. These issues did indeed post total returns greater over the 12 months through October, 2004, than the S&P 500's figure of 9.42%. And they are are still ranked 5 STARS today -- meaning S&P analysts still consider them good bets to outperform the market over the next 6 months to 12 months.

5-STARS TOTAL-RETURN LEADERS

Company

Ticker

Affiliated Computer Svcs.

ACS

Allstate

ALL

Alltel

AT

American Standard

ASD

Automatic Data Processing

ADP

Capital One

COF

Commerce Bancorp

CBH

Constellation Brands

STZ

ExxonMobil

XOM

FedEx

FDX

Fortune Brands

FO

Imclone

IMCL

Indymac Bancorp

NDE

Kaydon

KDN

La Quinta

LQI

Landstar System

LSTR

Lehman Brothers

LEH

Nabors Industries

NBR

Nextel Communications

NXTL

Smurfit-Stone Container

SSCC

Total

TOT

Wachovia

WB

Note: Effective Novermber 12, 2004, Standard & Poor's has modified its Stock Appreciation Ranking System (STARS) nomenclature:

5 STARS now designates a stock ranked strong buy, instead of the previous buy;

4 STARS is now buy, instead of accumulate;

2 STARS is now sell, instead of avoid; and

1 STARS is now strong sell, instead of sell.

The 3 STARS ranking remains as hold. De Guia is an analyst for Standard & Poor's Portfolio Advisors


Tim Cook's Reboot
LIMITED-TIME OFFER SUBSCRIBE NOW

Sponsored Financial Commentaries

Sponsored Links

Buy a link now!

 
blog comments powered by Disqus