St. Jude Medical Moves into S&P Top 10
By Kenneth Shea, Robert Gold, and Steve Biggar
On Jan. 20, 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. We at S&P added St. Jude Medical (STJ ; recent price: $39) to the portfolio, replacing Qualcomm (QCOM ; $38).
Liker all stocks in the S&P Top 10, Cooper carries S&P's top investment ranking, 5 STARS (strong buy). While it has exited the portfolio, Qualcomm retains its 5-STARS recommendation.
The inclusion of St. Jude reflects our belief that the company is well positioned to capitalize on rising cardiac defibrillator implantations in the U.S. We believe the eligible patient pool for these devicess will double, aided by favorable clinical data that should boost physician demand and raise Medicare reimbursements.
Our 12-month target price on St. Jude is $55, based on a forward p-e-to-growth (PEG) ratio of 1.5, in line with its industry peers.
For all of 2004, the S&P Top Ten rose 19.2%, vs. a gain of 10.9% for its benchmark, the S&P 500 index (both on a total return basis).
Here's the latest list:
|Company||Ticker||Price (1/20/05 close)||12-Month Target||Investment Rationale|
|Burlington Northern||BNI||46||54||Strong market share, rising shipping volume|
|Chattem||CHTT||33||43||Strong consumer product portfolio|
|Cooper Cos.||COO||75||86||See gain in market share|
|FMC Corp.||FMC||45||54||Improving profit outlook|
|Guitar Centers||GTRC||54||68||Attractive valuation|
|Ingersoll-Rand||IR||75||95||Expected improvements in several end markets|
|Landstar System||LSTR||37||44||High returns on assets and equity|
|MBNA||KRB||27||32||Strength in consumer lending|
|St. Jude Medical||STJ||38||55||Positive ICD market data|
For more information about the Top 10 portfolio, please visit http://www.businessweek.com/investor/content/jun2002/pi20020617_8998.htm
Shea is director of global equity research, and Gold and Biggar are senior portfolio group analysts, for Standard & Poor's Equity Research