Corinthian Enrolled in S&P Top 10

The fast-growing education concern replaces Pfizer in S&P's portfolio of best investment ideas

On July 25, Standard & Poor's equity research group made changes to the S&P Top 10 portfolio -- those issues it considers to be the best candidates for capital gains over the next 6 to 12 months. S&P replaced pharmaceutical giant Pfizer (PFE ) with fast-growing, for-profit education outfit Corinthian Colleges (COCO ).

Pfizer exited the portfolio after S&P analyst Herman Saftlas downgraded the stock's investment ranking to 4 STARS (accumulate) from 5 STARS (strong buy) on July 25. (All the stocks in the portfolio are ranked 5 STARS.) The downgrade reflected Saftlas' concerns about "macro-regulatory issues" -- drug re-importation and Medicare reimbursement -- along with slowing trends in the statin market, and generic challenges to several key Pfizer drugs.

As for Corinthian, S&P analyst Michael Jaffe notes that the company is benefiting from strong student enrollment at new and existing campuses. Jaffe believes strong top-line growth and productivity gains will fuel significant earnings per share growth for the foreseeable future. His 12-month target price for Corinthian is $65, derived by applying a 1.5 p-e-to-growth ratio to S&P's fiscal 2004 EPS estimate of $1.80.

Year-to-date through June 30, the S&P Top Ten portfolio gained 13.69% vs. an advance of 11.76% for its benchmark, the S&P 500-stock index (both of these performances include dividends).

Here's the latest list:

S&P Top 10 Portfolio

Company Current Price (7/30/03 close) 12-Month Target Investment Rationale
Boston Scientific (BSX ) 63.60 70 Explosive growth prospects
Comcast (CMCSA ) 30.82 37 Increasing synergies from broadband acquisition
Compass Bancshares (CBSS ) 34.20 41 Valuation, positive fundamental trends
Corinthian Colleges(COCO ) 54.71 65 See extended growth period; undervalued
DR Horton (DHI ) 28.61 38 Better-than-expected industry trends
Fair Isaac (FIC ) 58.85 68 Attractive valuation
Flextronics (FLEX ) 11.52 15 Firming business, low valuation
Intel (INTC ) 24.49 32 Recovery in worldwide chip demand expected to drive growth
Jacobs Engineering (JEC ) 44.15 48 See strong bookings from refining customers
Martek Biosciences(MATK ) 49.76 59 Annual revenue growth of nearly 100% seen through fiscal 2004

For more information about the Top 10 portfolio, please visit

By Ken Shea and Robert Gold

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