By Numer de Guia, CFA Suppose you could uncover a list of top-ranked stocks that have attractive valuations. And suppose those stocks also paid dividends at an above-average yield. Sound good? Then your list might just look like the contents of this week's screen.
Think of it as a three-pronged approach. First, we wanted to look for stocks with solid fundamentals. We started with the list of companies ranked 5 STARS (buy) by analysts from Standard & Poor's Equity Research. Stocks with that designation are expected to post a
total return that beats the benchmark S&P 500 index by a wide margin, with shares rising in price on an absolute basis.
Next, we wanted to make the case for these stocks based on valuation. We sifted for those issues with lower p-e ratios than the 20.9 average for the S&P 500.
Finally, we looked for something to interest investors who like dividend-paying stocks. We sorted for those issues with a higher indicated
dividend yield than the 1.69% average for the S&P 500. Our search turned up these 29 names:
Bank Of America
Burlington Northern Santa Fe
China Mobile Hong Kong
China Petroleum & Chem
Deere & Co.
Fifth Third Bancorp
Hartford Finaical Services
Johnson & Johnson
U S Bancorp
De Guia is an analyst for Standard & Poor's Portfolio Services