S&P PowerPicks Trail "500" in September

Best performers on the month: Scholastic and Allstate

By Ken Shea

S&P PowerPicks -- a portfolio of analysts' top picks for all of 2001 -- underperformed its benchmark, the S&P 500 index, in September. PowerPicks posted a loss of 12.5% versus a loss of 8.2% for the "500," as drubbings in stocks such as Host Marriott (-45%), Xilinx (-40%), and Rational Software (-40%) more than offset gains in Scholastic (+12%) and Allstate (+10%).

On a year-to-date basis, S&P PowerPicks now trails "500" by tally of -24.9% versus -21.2%. Through Sept. 30, 19 of the portfolio stocks beat the S&P 500, while 14 did not.

S&P's PowerPicks Portfolio for 2001

Company Reason
AK Steel Holding (AKS) 6% yield, low p-e offers good total return potential
Allstate (ALL) Steady EPS growth, low p-e
Avery-Dennison (AVY) Steady EPS grower, attractive valuation
BJ's Wholesale Club (BJ) Steady, high-teen annual EPS growth seen
BJ Services (BJS) To benefit from rising oil, natural gas drilling
Citigroup (C) Broad business base offers steady growth
Cephalon (CEPH) High-potential pipeline, attractive valuation
Comcast (CMCSK) Strong cash flow growth, attractive valuation
Cisco Systems (CSCO) Rapid growth of networking equipment
CVS (CVS) Strong EPS growth seen continuing
Dynegy (DYN) Strong growth seen continuing for major IPP
HEALTHSOUTH (HRC) Major operational turnaround underway
Host Marriott (HMT) 8% yield, low p-e offers good total return potential
ITT Ind. (ITT) Steady EPS growth seen; low p-e
JDS Uniphase (JDSU) Capturing growth of optical component market
Kaydon (KDN) Steady EPS growth, attractive valuation
Kinder Morgan (KMI) Sizable natural gas assets, strong EPS growth
Lehman Bros. (LEH) Low p-e, takeover kicker
Macromedia (MACR) Strong demand for applications software
Millipore (MIL) Strong orders seen driving 20% EPS growth
Philip Morris (MO) Improving business environment, low p-e
Pfizer (PFE) Strong drug pipeline seen driving 25% EPS growth
Rational Software (RATL) Strong demand for e-business, Internet software
Renal Care Group (RNCG) EPS rising for leading dialysis services provider
Sanmina (SANM) To benefit from growing contract manufacturing sector
Scholastic (SCHL) Attractive valuation to growth prospects
Seitel (SEI) Strong demand for oil exploration equipment
TXU Corp. (TXU) 5% yield, low p-e offers good total return potential
Tyco Int'l (TYC) Internal growth, steady acquisitions driving growth
US Freightways (USF) Low p-e for diversified transport services provider
Vodaphone Group (VOD) Leading global wireless communications company
Watson Wyatt (WW) Good EPS gains seen for major benefits consultant
Xilinx (XLNX) Leading maker of programmable logic devices

For more information on the S&P PowerPicks portfolio, please visit http://www.businessweek.com/investor/content/jan2001/pi2001011_250.htm

Shea is equity research director of Standard & Poor's

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