S&P's Top Stock Picks for 2003
By Ken Shea
Looking for an investment strategy that lets you build a stock portfolio with issues that mirror the sector makeup of the Standard & Poor's 500-stock index? With S&P's PowerPicks 2003 Portfolio you can do that -- and pick the brains of S&P analysts for their top choices in each group. Launched on December 31, 2002, the PowerPicks 2003 Portfolio represents the latest annual collection of "best ideas" from each member of S&P's equity research staff.
Each of the 40 contributing industry analysts has chosen one of the stocks he or she follows as the best-positioned for superior growth. The S&P PowerPicks 2003 Portfolio is diversified across all 10 S&P economic sectors that make up the S&P 500 index, and its sector representations are closely aligned with those of the S&P 500.
The portfolio will be "frozen," meaning that it will undergo no changes throughout the entire year. Its objective is to exceed the total return (capital appreciation plus dividends paid) generated by the S&P 500 during the year.
The median capitalization of the S&P PowerPicks 2003 Portfolio is approximately $6.2 billion, ranging from a high of $225 billion for Wal-Mart to a low of $640 million for Quiksilver. By contrast, the S&P 500's median market cap is approximately $7.2 billion, ranging from a high of $313 billion for Microsoft to $209 million for McDermott International. The PowerPicks 2003 Portfolio comprises 22 stocks considered to be large-cap issues (market cap above $5 billion), 16 mid-caps ($1 billion to $4.99 billion), and two small-caps (below $1 billion).
The heaviest S&P sector representations within this year's PowerPicks are Financials, Information Technology, and Health Care, which together account for nearly half of both the S&P 500 and the PowerPicks 2003 Portfolio. Since its inception on January 1, 1997, the S&P PowerPicks Portfolio's cumulative total-return performance through November 30, 2002, was +57.0%, vs. +37.6% for the S&P 500 (both including dividends). Year-to-date in 2002 through Nov. 30, the S&P PowerPicks 2002 portfolio total return was –18.1%, vs. –17.2% for the S&P 500 (both including dividends).
Here's the roster for the S&P PowerPicks 2003 Portfolio:
Shea is director of global equity research for Standard & Poor's