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Top-Line Growth STARS


By Michael Director With all the questions swirling around how Corporate America reports earnings, investors may be looking for other ways to get a handle on the health of a company's business. Looking at the trend in sales growth can provide some clues. While not a perfect gauge, sales figures -- the "top line" in an income statement -- are less prone to massaging by zealous number-crunchers than are reported profits.

At Standard & Poor's, we wanted to find companies whose sales were increasing -- whether through improvements at existing businesses or strategic acquisitions -- at a much faster pace than the 9.3% average year-over-year rise for the S&P 500 in 2001. We set the bar pretty high: Companies had to have posted at least a 30% sales rise in their last full fiscal year over the prior year.

And we added one more filter to our search. All the stocks had to be ranked 5 STARS (buy) by S&P, meaning S&P equity analysts expect them to outperform the overall market over the next 6 to 12 months.

The following 19 stocks emerged:

Capital One (COF)

Cendant (CD)

Cephalon (CEPH)

Chicos FAS (CHS)

Clear Channel (CCU)

Direct Focus (DFXI)

Electronics Boutique (ELBO)

Evergreen Resources (EVG)

Genzyme (GENZ)

IDEC Pharmaceuticals (IDPH)

Indymac Bancorp (NDE)

Linear Technology (LLTC)

Moody's (MCO)

Nabors Industries (NBR)

National Commerce Financial (NCF)

PepsiCo (PEP)

Triad Hospitals (TRI)

Tripos (TRPS)

Wellpoint Health (WLP) Director is a portfolio services analyst for Standard & Poor's


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