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Stocks That Did Best After Lehman May Also Do Well Now

Coca-Cola Co. (KO) and Priceline.com Inc. (PCLN) are among 26 stocks JPMorgan Chase & Co. says may return more than the market if U.S. equities drop like they did after the collapse of Lehman Brothers Holdings Inc.

The list includes companies with high price-to-book and price-to-earnings ratios that are also liked by analysts and are considered growth stocks, Thomas Lee, the New York-based firm’s chief U.S. equity strategist, wrote in a note today. Stocks that meet the criteria may perform better than benchmark gauges in two scenarios: if the Standard & Poor’s 500 Index plunges like it did in 2008 after Lehman’s bankruptcy, or if it rallies, which is what happened following the Asian crisis, he said.

The benchmark gauge for American equities is down 17 percent from its high in April after the U.S. lost its AAA credit rating from S&P and concern about the European debt crisis grew. Since the beginning of August, the index has traded between about 1,100 and 1,300. While U.S. equities reacted in opposite directions after the two previous crises, Lee said the valuation levels and fundamentals of the 26 stocks may mean they’re poised to outperform no matter which direction the S&P 500 moves.

“What worked both post-Asia ’98 and post-Lehman failure ’08?” Lee wrote in the note. “It is not entirely a surprise that ‘growth’ outperformed, but the fact these other style attributes outperformed is less obvious.”

Lee considered companies in the S&P 500 Pure Growth Index and corporations with an enterprise value at least 8.8 times earnings before interest, tax, depreciation and amortization. He looked for price-to-book values higher than 2.89 and price- to-earnings ratios above 13.9.

The following is the list of 26 stocks that met the criteria, according to Lee.


Name (Ticker symbol)

Allergan Inc. (AGN US)
Altera Corp. (ALTR US)
American Tower Corp. (AMT US)
Biogen Idec Inc. (BIIB US)
Cerner Corp. (CERN US)
Coach Inc. (COH US)
Coca-Cola Co. (KO US)
Cognizant Technology Solutions Corp. (CTSH US)
Edwards Lifesciences Corp. (EW US)
Estee Lauder Cos Inc. (EL US)
F5 Networks Inc. (FFIV US)
IntercontinentalExchange Inc. (ICE US)
International Flavors & Fragrances Inc. (IFF US)
Intuit Inc. (INTU US)
Precision Castparts Corp. (PCP US)
Priceline.com Inc. (PCLN US)
Ralph Lauren Corp. (RL US)
Sigma-Aldrich Corp. (SIAL US)
Starwood Hotels & Resorts Worldwide Inc. (HOT US)
Stericycle Inc. (SRCL US)
Teradata Corp. (TDC US)
Tiffany & Co. (TIF US)
Waters Corp. (WAT US)
Whole Foods Market Inc. (WFM US)
WW Grainger Inc. (GWW US)
Yum! Brands Inc. (YUM US)

To contact the reporter on this story: Whitney Kisling in New York at wkisling@bloomberg.net

To contact the editor responsible for this story: Nick Baker at nbaker7@bloomberg.net

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