By Kenneth Shea, Steve Biggar, and Robert Gold On Aug. 19, Standard & Poor's Equity Research Group made changes to the S&P Top Ten Portfolio -- those stocks it considers those stocks it considers to be the best candidates for capital gains over the next 6 to 12 months. We at S&P added Bank of America (BAC

; recent price: $43.80) to replace Audible (ADBL

; $12.60), the leading provider of digitally delivered spoken-word audio content on the Web, which was downgraded to buy from strong buy.

Like all the stocks in the portfolio, Bank of America carries Standard & Poor's highest investment ranking of 5 STARS (strong buy). Our continued bullishness on Bank of America reflects our belief that this highly diversified banking and financial services firm offers an attractive risk/return profile at current levels. We are also positive on the recent merger with FleetBoston Financial and the pending acquisition of MBNA (KRB

; $25.30).

Our 12-month target price for Bank of America is $54. The stock offers a 4.6% dividend yield, above peer average.

As for Audible, analyst Scott Kessler continues to believe in the long-term growth potential of the company's businesses, and that the shares offer compelling value based on discounted cash flow and relative 2006 p-e-to-growth analyses. However, given the relatively small size and emerging nature of the company, he believes the associated execution and investment risks are considerable.

Kessler kept his revenue and earnings forecasts, along with his 12-month target price of $22 for Audible shares. He believes the upcoming launches of Audible Wireless and Audible Education could be positive catalysts in the third quarter.

A dynamic model portfolio concept, the S&P Top Ten was launched on Dec. 31, 2001. From inception through July 29, 2005, it has gained 30.7%, vs. 14.35% for the S&P 500 (total return basis). For all of 2004, the S&P Top Ten rose 19.2%, vs. a gain of 10.9% for the S&P 500 (total return). Year-to-date through July 29, the portfolio rose 8.44% vs. 2.88% for the S&P 500.

Here's the S&P Top Ten list:

S&P TOP TEN PORTFOLIO

Company

Ticker

Price (8/18/05 close)

12-Month Target

Investment Rationale

Bank of America

BAC

43.62

54

Attractive risk/return profile

Burlington Northern

BNI

54.28

65

Strong market share, rising shipping volume

Covance

CVD

50.35

61

Attractive valuation

Guitar Centers

GTRC

59.30

75

Attractive valuation

Ingersoll-Rand

IR

79.06

100

Expected improvements in several end-markets

International Speedway

ISCA

56.75

68

Dominant position with NASCAR

Lennar

LEN

59.89

76

Attractive valuation

MDC Holdings

MDC

74.97

110

Projections for higher EPS and gross margin

St. Jude Medical

STJ

43.49

61

Positive ICD market data

Smith International

SII

66.17

81

Attractive valuation

Shea is director of Global Equity Research, Biggar is director of U.S. Equity Research and Gold is senior portfolio group analyst, for Standard & Poor's Equity Research