Changes Brewing for the S&P Top Ten

Anheuser-Busch joins S&P's portfolio of best investment ideas, replacing Barr Labs

On Dec. 11, 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 generic drugmaker Barr Laboratories (BRL ; recent price, $76) with brewing giant Anheuser-Busch (BUD ; $52).

Like all the stocks in the portfolio, Anheuser-Busch carries S&P's highest investment ranking, 5 STARS (buy). Barr was removed from the portfolio after it was downgraded to 3 STARS (hold) from 5 STARS on Dec. 10.

Anheuser-Busch is the name behind well known beer brands Budweiser, Michelob, and Busch, and has other operations in entertainment, glass manufacturing, theme parks, and real estate. S&P is encouraged by favorable beer pricing trends which, along with anticipated market share gains in U.S. and abroad, are expected to drive a gain in estimated 2004 earnings per share of around 13%, to $2.79. Additionally, we feel that likely investor rotation into higher quality names in 2004 will allow for some expansion of Anheuser's p-e multiple. Our 12-month target price for the stock is $63.

Year-to-date through Nov. 30, the S&P Top Ten portfolio climbed 39.4%, vs. a gain of 22.3% 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 Price (12/11/03 close) 12-Month Target Investment Rationale
Affiliated Computer (ACS ) 53.08 63 Long-term trend toward IT outsourcing
America West Holdings (AWA ) 11.45 25 Outperforming peers; valuation
Anheuser-Busch (BUD ) 52.40 63 Strong growth profile, market dominance
Comcast (CMCSA ) 31.58 37 Increasing synergies from broadband acquisition
DR Horton (DHI ) 40.76 56 Better-than-expected industry trends
Flextronics (FLEX ) 14.61 21 Firming business, low valuation
Hologic (HOLX ) 16,60 21 Cost controls and product focus; valuation
Intel (INTC ) 30.91 45 Recovery in worldwide chip demand expected to drive growth
Landstar System (LSTR ) 38.79 48 High returns on assets and equity
Lennar (LEN ) 92.24 127 Favorable business model, sector strength

For more information about the Top 10 portfolio, please visit

By Ken Shea and Robert Gold

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