Top-Line Growth STARS

S&P's latest screen found 19 top-ranked stocks whose sales are rising at a far faster pace than the S&P 500

By Michael Director

With all the questions swirling around how Corporate America reports earnings, investors may be looking for other ways to get a handle on the health of a company's business. Looking at the trend in sales growth can provide some clues. While not a perfect gauge, sales figures -- the "top line" in an income statement -- are less prone to massaging by zealous number-crunchers than are reported profits.

At Standard & Poor's, we wanted to find companies whose sales were increasing -- whether through improvements at existing businesses or strategic acquisitions -- at a much faster pace than the 9.3% average year-over-year rise for the S&P 500 in 2001. We set the bar pretty high: Companies had to have posted at least a 30% sales rise in their last full fiscal year over the prior year.

And we added one more filter to our search. All the stocks had to be ranked 5 STARS (buy) by S&P, meaning S&P equity analysts expect them to outperform the overall market over the next 6 to 12 months.

The following 19 stocks emerged:

• Capital One (COF )

• Cendant (CD )

• Cephalon (CEPH )

• Chicos FAS (CHS )

• Clear Channel (CCU )

• Direct Focus (DFXI )

• Electronics Boutique (ELBO )

• Evergreen Resources (EVG )

• Genzyme (GENZ )

• IDEC Pharmaceuticals (IDPH )

• Indymac Bancorp (NDE )

• Linear Technology (LLTC )

• Moody's (MCO )

• Nabors Industries (NBR )

• National Commerce Financial (NCF )

• PepsiCo (PEP )

• Triad Hospitals (TRI )

• Tripos (TRPS )

• Wellpoint Health (WLP )

Director is a portfolio services analyst for Standard & Poor's

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