PowerPicks Hit a Late-Summer Soft Patch

Weakness in Corinthian Colleges and Open Text weighed on the portfolio of S&P analysts' top selections in August

By Ken Shea and Robert Gold

The -- representing S&P analysts' top picks for the year -- trailed its benchmark, the S&P 500 index, once again in August. For the month, the portfolio posted a loss of 2.3%, vs. a gain of 0.4% for the "500", both including dividends.

A number of portfolio stocks turned in strong performances for the month, including Mylan Labs (MYL ), up 17.6%, America West (AWA ), up 8.6%, Millennium Pharma (MLNM ), up 6.9%, Citigroup (C ), up 5.7%, and Bear Stearns (BSC ), up 5.4%. In particluar, Mylan and America West were able to bounce back from significant losses in the prior month.

But stellar performances from the leaders weren't sufficient to lift the entire PowerPicks group. The overall portfolio was weighed down by losses in Corinthian Colleges (COCO ), down 39.3%, Open Text (OTEX ), down 14.9%, Analog Devices (ADI ), down 12.4%, Intrado (TRDO ), down 12.0%, and Nextel Partners (TRDO ), down 10.3%.

Year to date through Aug. 31, the portfolio has beaten the "500" in 4 of 8 months, but has lagged its benchmark with a 3.2% decline on a total return basis, while the "500" was up 0.4%. Of the 40 portfolio stocks, 21 had beaten the "500" while 19 had underperformed the index.

About the S&P PowerPicks 2004 Portfolio

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

Each of the most senior 40 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 2004 Portfolio is diversified across all the 10 S&P economic sectors comprising the S&P 500 index.

The portfolio is a "frozen" one, meaning 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 index during the next 12 months.

Sector/Company Ticker Market Cap $bil. S&P Earns. & Div. Rank S&P Index
CONSUMER DISCRETIONARY
Comcast Class A CMCSA 71,052 C 500
Fortune Brands FO 10,091 B- 500
Gannett GCI 23,755 A 500
La Quinta LQI 901 C None
Omnicom OMC 15,857 A+ 500
Quicksilver ZQK 944 B+ 600
Viacom Class B VIA.B 67,380 B- 500
CONSUMER STAPLES
Constellation Brands STZ 3,471 B+ 400
PepsiCo PEP 83,262 A 500
Sysco SYY 23,284 A+ 500
ENERGY
ENSCO Intl. ESV 3,957 B 400
Evergreen Resources EVG 1,316 B- 600
Exxon Mobil XOM 243,108 A- 500
FINANCIALS
Bear Stearns BSC 7,142 A 500
Citigroup C 240,291 A+ 500
Commerce Bancorp CBH 3,915 A 400
Hartford Financial Services HIG 16,139 B 500
IndyMac Bancorp NDE 1,666 B+ 400
MBNA KRB 31,980 A+ 500
HEALTH CARE
Caremark Rx CMX 7,183 B- None
Hologic HOLX 317 B- 600
Millennium Pharmaceuticals MLNM 4,727 NR 400
Mylan Labs MYL 6,648 A- 400
Triad Hospitals TRI 2,532 NR 400
INDUSTRIALS
America West Holdings AWA 424 NR None
Corinthian Colleges COCO 2,517 NR 400
Kaydon KDN 730 A- 600
Landstar LSTR 1,083 B 600
Manitowoc MTW 741 B 600
INFORMATION TECHNOLOGY
Analog Devices ADI 17,322 B 500
Automatic Data Processing ADP 23,099 A+ 500
Cadence Design Systems CDN 4,600 B- 400
Flextronics FLEX 7,715 NR None
IBM Corp. IBM 155,900 B 500
Intrado TRDO 1,083 NR None
Open Text OTEX 788 NR None
MATERIALS
Smurfit-Stone Container SSCC 4,486 B- None
Sealed Air SEE 4,517 NR 500
TELECOM SERVICES
Nextel Partners NXTP 2,951 NR None
UTILITIES
Reliant Resources RRI 1,815 NR None

For more on the S&P PowerPicks 2004 portfolio, please visit http://www.businessweek.com/investor/content/dec2003/pi20031226_5517_pi071.htm

Shea is director of global equity research, and Gold a senior portfolio group analyst, for Standard & Poor's Equity Research

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