PowerPicks Outpace "500" in January

Among the month's best performers in the portfolio of S&P analysts' top picks for the year: Lear, Apache, and Sybase

By Ken Shea

The -- representing S&P analysts' top picks for the year -- got off to a good relative start for the year vs. its benchmark, the S&P 500 index, in January. The portfolio declined 2.0% on the month, vs. the index's loss of 2.8%.

The portfolio's biggest gainers in January were Lear (+21%), Apache (+10%), and Sybase (+7%). The worst PowerPicks performers on the month included Kraft (-18%), Synopsys (-16%), and Overture (-15%).

During the 2003 portfolio's initial month, 22 stocks beat the "500", while 18 did not.

About the S&P PowerPicks 2003 Portfolio

The portfolio represents the collective "best ideas" of the Standard & Poor's equity research staff.

Each of the 35 industry analysts on S&P's equity research staff has chosen one of the stocks they follow as the best-positioned for superior growth. The S&P PowerPicks 2002 Portfolio is diversified across all the 10 S&P economic sectors comprising the S&P 500 index.

The portfolio is a "frozen" one, meaning that it will undergo no changes throughout the entire year. The objective of the portfolio is to exceed the total return (capital appreciation plus dividends paid) generated by the S&P 500 during the year.

Sector/Company Market Cap $bil. Investment Rationale
CONSUMER DISCRETIONARY
Lear 2.3 Favorable shift in product mix, low valuation
Newell Rubbermaid 8.3 New CEO, better vendor relations
News Corp. 44.1 Prospects for improved ad market
P.F. Chang's 0.9 Exceptional growth characteristics
Quiksilver 0.6 Market share gains, margin improvements
Toys "R" Us 2.6 Free cash flow and p-e should grow
Wal-Mart 223.1 Continued market share gains, strong growth
CONSUMER STAPLES
Kraft Foods 68.6 Defensive appeal, superior prospects
Sysco 19.7 Positive sales trend continue
ENERGY
Apache 8.4 Shares attractively valued
Nabors Industries 5.5 Natural-gas activity rising
Questar 2.2 EPS growth to 2005 beats peers
FINANCIALS
Chelsea Property 1.3 Stronger earnings growth
Citigroup 182.0 Shares trading at a big discount to historical valuation
IndyMac 1.0 Attractively valued
Lehman Bros. 12.9 Strong franchise, undervalued, takeover candidate
MetLife 19.7 Restructuring initiatives
Moody's 6.3 Strong free cash flow and profit margins
National Commerce Financial 4.9 Strong market demographics
HEALTH CARE
Amgen 64.8 Undervalued vs. peers, with less risk
Boston Scientific 17.0 Explosive growth prospects
Cardinal Health 27.6 Strong performance expected from all business segments
Dentsply International 2.9 Attractive valuation
Invitrogen 1.6 Expect 10% growth over the long term
Lilly (Eli) 72.4 Unmatched product pipeline
INDUSTRIALS
Corinthian Colleges 1.6 Growing market share of for-profit institutions
FedEx 15.5 Stock attractively valued
Jacobs Engineering 2.0 Strong bookings from refining market
Precision Castparts 1.3 Potential upturn in aircraft manufacturing
INFORMATION TECHNOLOGY
Affiliated Computer Services 6.4 Solid defensive play in current market
Cisco Systems 96.8 More market-share gains likely
Microchip Technology 5.0 Pure play in microcontroller chips
Nokia 78.6 Leading market position
Overture Services 1.7 Good fundamentals, attractive valuation
Sybase 1.2 Valuation, balance sheet, strong management
Synopsys 3.3 Potential upturn in electronics markets
MATERIALS
IMC Global 1.3 Poised to benefit from industry rebound
Nucor 3.3 Attractive valuation
TELECOM SERVICES
ALLTEL 15.9 Solid EPS quality, stable balance sheet
UTILITIES
Entergy 10.1 Earnings growth above peers

For more on the S&P PowerPicks 2003 portfolio, please visit http://www.businessweek.com/investor/content/dec2002/pi20021231_4149.htm

Shea is director of global equity research for Standard & Poor's

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