A Strong First Half for PowerPicks

The portfolio of S&P analysts' top picks for the year bested the S&P 500 in the first six months of 2003

The -- representing S&P analysts' top picks for the year -- outperformed its benchmark, the S&P 500 index, in the first half of 2003. For the six months through June 30, the portfolio generated a total return of 13.9%, vs. an 11.8% advance for the "500".

The top performers in the portfolio for the period were Boston Scientific (+44%), Lear (+38%), Indymac Bancorp (+37%), Amgen (+36%), and P.F. Chang's China Bistro (+36%). Notable underperformers in the group: IMC Global (-37%), Overture Services (-34%), Kraft Foods (-16%) and Affiliated Computer (-13%).

Year to date through June 30, 24 portfolio stocks beat the "500", while 16 did not.

About the S&P PowerPicks 2003 Portfolio

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

Each of the 35 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 2002 Portfolio is diversified across all the 10 S&P economic sectors comprising the S&P 500 index.

The portfolio is a "frozen" one, meaning that 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 during the year.

Sector/Company Market Cap $bil. Investment Rationale
Lear 2.3 Favorable shift in product mix, low valuation
Newell Rubbermaid 8.3 New CEO, better vendor relations
News Corp. 44.1 Prospects for improved ad market
P.F. Chang's 0.9 Exceptional growth characteristics
Quiksilver 0.6 Market share gains, margin improvements
Toys "R" Us 2.6 Free cash flow and p-e should grow
Wal-Mart 223.1 Continued market share gains, strong growth
Kraft Foods 68.6 Defensive appeal, superior prospects
Sysco 19.7 Positive sales trend continue
Apache 8.4 Shares attractively valued
Nabors Industries 5.5 Natural-gas activity rising
Questar 2.2 EPS growth to 2005 beats peers
Chelsea Property 1.3 Stronger earnings growth
Citigroup 182.0 Shares trading at a big discount to historical valuation
IndyMac 1.0 Attractively valued
Lehman Bros. 12.9 Strong franchise, undervalued, takeover candidate
MetLife 19.7 Restructuring initiatives
Moody's 6.3 Strong free cash flow and profit margins
National Commerce Financial 4.9 Strong market demographics
Amgen 64.8 Undervalued vs. peers, with less risk
Boston Scientific 17.0 Explosive growth prospects
Cardinal Health 27.6 Strong performance expected from all business segments
Dentsply International 2.9 Attractive valuation
Invitrogen 1.6 Expect 10% growth over the long term
Lilly (Eli) 72.4 Unmatched product pipeline
Corinthian Colleges 1.6 Growing market share of for-profit institutions
FedEx 15.5 Stock attractively valued
Jacobs Engineering 2.0 Strong bookings from refining market
Precision Castparts 1.3 Potential upturn in aircraft manufacturing
Affiliated Computer Services 6.4 Solid defensive play in current market
Cisco Systems 96.8 More market-share gains likely
Microchip Technology 5.0 Pure play in microcontroller chips
Nokia 78.6 Leading market position
Overture Services 1.7 Good fundamentals, attractive valuation
Sybase 1.2 Valuation, balance sheet, strong management
Synopsys 3.3 Potential upturn in electronics markets
IMC Global 1.3 Poised to benefit from industry rebound
Nucor 3.3 Attractive valuation
ALLTEL 15.9 Solid EPS quality, stable balance sheet
Entergy 10.1 Earnings growth above peers

For more on the S&P PowerPicks 2003 portfolio, please visit http://www.businessweek.com/investor/content/dec2002/pi20021231_4149.htm

By Robert Gold

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