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Commentary > Sivy on Stocks

Sivy on Stocks

If there is any way to beat the market over the long run, it consists of following the strongest, most secure stocks and trying to scoop them up when they are measurably undervalued.

There are surprisingly few such stocks that you need to follow on an on-going basis -- we've come up 70, which you can track in the table below.

What are the defining characteristics of these great growth stocks? Size is certainly part of it, and almost all of the stocks on the core list have market capitalizations and total revenues that top $5 billion a year.

We also looked for companies with diverse product lines and dominant positions in their industries.

As for growth, we sought companies that are capable of returning a steady 11 percent to 12 percent a year through a combination of earnings gains and yield.

Click on column headings to re-sort »Last updated Mar 28 12:00
Company
(Ticker symbol)
Current
share
price
52-wk
high
52-wk
low
P/E
(TTM)
Proj.
5-year
growth
PEG
ratio
Comments
Aetna (AET) $49.70 $52.48 $33.70 18 15.0% 0.5 Health insurer recovering from business lost because of corporate layoffs
Boston Scientific (BSX) $23.50 $31.32 $20.57 31 20.0% 0.7 Maker of less-invasive medical devices for heart and digestive tract
UnitedHealth Group (UNH) $54.68 $64.61 $44.30 22 17.0% 0.8 Health insurer's acquisition of Mid-Atlantic allows for cost cutting
General Dynamics (GD) $64.68 $65.95 $50.36 17 12.0% 0.9 Higher defense spending should help General Dynamics, which makes tanks and troop carriers.
ConocoPhillips (COP) $64.54 $71.48 $47.55 6 6.5% 1.0 No. 3 U.S. oil company is an inflation hedge and is adding to its oil & gas reserves at a very high rate.
Pfizer (PFE) $25.47 $29.21 $20.27 23 12.3% 1.0 The world's largest pharmaceutical company needs new products to replace those coming off patent.
Citigroup (C) $47.57 $49.76 $42.91 12 12.0% 1.0 Largest and best-diversified U.S. financial services company
CVS Corp (CVS) $29.48 $31.60 $23.89 20 13.0% 1.1 Improving growth prospects could boost P/E for largest drug retailer
United Technologies (UTX) $59.25 $59.94 $48.43 18 10.0% 1.1 Conglomerate looking for upturn in its aerospace markets
Tyco International (TYC) $27.36 $34.48 $24.65 17 14.0% 1.2 Plans to realize hidden value by breaking up the company haven't offset Tyco's soft earnings outlook.
Intel (INTC) $19.74 $28.84 $19.31 14 15.0% 1.2 The leading semiconductor maker is investing heavily in new chips to outpace its rival AMD.
Limited Brands (LTD) $24.41 $25.50 $18.81 18 15.0% 1.2 Retailer owns chains such as Victoria's Secret and Bath & Body Works
Applied Materials (AMAT) $17.67 $21.06 $14.33 27 17.5% 1.2 The biggest semiconductor-equipment maker is volatile but may be seeing an upturn in new orders.
Gannett (GCI) $58.91 $80.02 $58.07 11 9.8% 1.2 Publisher of USA Today and 100 other newspapers tracks advertising
Clear Channel Comm (CCU) $29.38 $34.81 $27.82 25 17.0% 1.2 Leading radio-station operator still awaiting advertising upturn
Harley-Davidson (HDI) $52.37 $59.40 $44.40 15 15.0% 1.2 Leading U.S. maker of motorcycles with fantastically loyal customers
Staples (SPLS) $25.40 $25.67 $18.64 22 15.5% 1.2 This leading chain of office-supply superstores has long been cranking out steady earnings gains.
Bank of America (BAC) $46.67 $47.44 $41.13 11 10.0% 1.3 Acquisition of FleetBoston helps consumer business, and stock is cheap
Best Buy (BBY) $55.65 $57.69 $31.93 27 15.0% 1.3 Consumer-electronics retailer to profit from new digital technology
Aflac (AFL) $46.25 $49.65 $35.50 15 15.0% 1.3 Life insurer suffering from recession-induced sluggishness in sales
J.P. Morgan Chase (JPM) $41.94 $42.43 $32.92 17 10.0% 1.3 Second-largest U.S. bank now that Bank One merger has been completed
Dell (DELL) $30.01 $41.99 $28.60 20 17.0% 1.4 PC sales have been weak, but Dell is benefiting from sales of servers and from overseas business.
Johnson Controls (JCI) $76.49 $77.60 $52.57 19 13.5% 1.4 Control systems and auto parts largely reflect state of auto business
Lowe's (LOW) $65.89 $69.70 $50.72 19 17.5% 1.4 Smaller, cheaper rival of Home Depot looks to state of housing market
Sysco (SYY) $32.14 $38.04 $29.11 22 15.0% 1.4 Largest U.S. distributor of food to restaurants and institutions
Wal-Mart Stores (WMT) $48.08 $51.27 $42.31 17 14.0% 1.4 Despite labor troubles, Wal-Mart can maintain profitability by adjusting its product mix and expanding.
Lilly (LLY) $56.62 $60.98 $49.47 30 14.1% 1.4 Top drugmaker is ready to launch several promising new products
Anheuser-Busch (BUD) $42.79 $48.49 $40.15 18 11.0% 1.4 World's largest brewer produces half of the beer consumed in the U.S.
Alcoa (AA) $30.57 $32.20 $22.28 21 12.0% 1.5 Biggest U.S. aluminum producer, with growth-stock earnings potential
Amgen (AMGN) $73.47 $86.92 $56.19 25 20.0% 1.5 Former biotech diversifying beyond two blockbuster products
Johnson & Johnson (JNJ) $59.59 $69.99 $56.65 17 12.9% 1.5 The best-diversified health-care company needs new products to replace those coming off patent.
Merrill Lynch (MER) $78.83 $79.16 $52.00 15 12.0% 1.5 Leading full-service brokerage is benefiting from market upturn
American Express (AXP) $53.06 $55.00 $43.34 20 13.3% 1.5 Record billings and membership growth hinge on consumer spending
Home Depot (HD) $42.98 $43.98 $34.56 15 13.0% 1.5 Do-it-yourselfers encouraged by strong housing sales
Washington Mutual (WM) $43.09 $45.60 $36.64 11 9.0% 1.5 Seattle-based lender hurt by slowdown in mortgage refinancing
First Data (FDC) $47.50 $48.45 $36.50 23 15.0% 1.5 Provider of services for money-transfer and credit-card transactions
Fortune Brands (FO) $81.82 $90.48 $73.50 21 12.0% 1.5 A superb set of consumer brands, including Jim Beam bourbon, Moen faucets and Titleist golf balls.
Texas Instruments (TXN) $31.63 $34.95 $22.51 22 20.0% 1.6 Top maker of digital signal processors used in communications
Target (TGT) $53.30 $60.00 $45.55 19 15.0% 1.6 The upscale discounter's sales are running a bit below expectations
Nike B (NKE) $85.59 $91.54 $75.10 16 13.4% 1.6 World's largest footwear maker feels the swoosh of recovery
Cisco Systems (CSCO) $21.72 $21.85 $16.83 24 15.0% 1.6 Leading maker of routers for the Internet is posting very strong sales
Abbott Laboratories (ABT) $42.93 $50.00 $37.50 19 12.0% 1.6 Diverse health-care products and a promising pipeline of new drugs
FedEx (FDX) $112.78 $116.00 $76.81 20 15.0% 1.6 Booming air express service is making up for any weakness in ground shipping or at Kinko's.
InterActiveCorp (IACI) $30.50 $31.50 $23.25 18 20.0% 1.7 Barry Diller's collection of Internet businesses that turn in consistent profits
Disney (DIS) $27.43 $29.00 $22.89 21 15.0% 1.7 Valuable entertainment assets weighed down by management infighting
Illinois Tool Works (ITW) $97.41 $98.75 $78.50 18 13.5% 1.7 Maker of fasteners and construction items benefiting from recovery
IBM (IBM) $82.98 $91.76 $71.85 16 10.0% 1.7 Diverse computer giant looks for upturn in corporate IT spending
Anadarko Petroleum (APC) $101.89 $110.15 $67.71 9 9.0% 1.8 Leading exploration and production company for natural gas
3M (MMM) $76.91 $86.59 $69.71 18 11.5% 1.8 The maker of Scotch Tape and Post-its needs to boost sales growth across its diverse product lines.
Microsoft (MSFT) $27.01 $28.38 $23.82 22 11.8% 1.8 Still the premier software company for PCs, with $50 billion in cash
Northrop Grumman (NOC) $68.37 $70.04 $52.17 17 12.0% 1.9 Higher defense spending should help Northrop, which makes aircraft carriers, ships and subs.
Time Warner (TWX) $16.85 $19.00 $16.10 27 13.8% 1.9 A collection of undervalued media assets that needs to start showing some earnings momentum.
Danaher Corp (DHR) $64.00 $65.42 $48.32 23 15.0% 1.9 Valuation for well-managed conglomerate is depressed despite strong growth
DuPont (DD) $42.63 $51.88 $37.60 20 9.5% 1.9 Largest U.S. chemical company offering above-average dividend yield
Omnicom Group (OMC) $83.77 $89.00 $75.75 19 11.3% 1.9 World's largest ad company posts earnings gains on better ad market
Colgate-Palmolive (CL) $57.54 $58.29 $48.25 23 11.0% 2.0 Maker of toothpaste, soap and laundry detergent cheaper than P&G
Wyeth (WYE) $48.81 $50.49 $40.54 18 9.0% 2.0 Strong pharmaceutical pipeline still eclipsed by liabilities from diet drugs
Procter & Gamble (PG) $57.99 $62.50 $51.86 21 11.0% 2.0 Superb collection of widely recognized consumer brands
General Electric (GE) $33.67 $37.34 $32.21 19 10.0% 2.1 Earnings growth has slowed at America's top conglomerate but should pick up over the coming year.
Coca-Cola (KO) $42.38 $45.26 $39.36 20 10.0% 2.1 Still one of the best brands in the world, but soda sales have been lackluster in the U.S. and Europe.
PepsiCo (PEP) $58.65 $60.55 $52.01 24 11.5% 2.2 Smart diversification away from cola and into snack foods has enabled PepsiCo to outperform Coke.
ExxonMobil (XOM) $61.68 $65.96 $52.78 10 8.5% 2.2 The largest U.S. oil company can help protect your portfolio against rising energy costs and inflation.
Walgreen (WAG) $44.30 $49.01 $40.98 28 15.0% 2.3 leading drugstore chain posting exceptional gains in same-store sales
Hershey Foods (HSY) $53.02 $67.37 $50.62 26 10.0% 2.6 Brand extensions and cost cutting wring higher profits from chocolate
Boeing (BA) $78.55 $79.20 $56.22 24 12.0% 2.7 Largest U.S. maker of commercial airplanes is benefiting from industry upturn
Burlington Northern (BNI) $81.29 $82.97 $45.98 20 10.0% 3.2 One of the largest and best-managed U.S. railroads has been benefiting from stronger demand.
Schlumberger (SLB) $125.33 $131.75 $64.62 34 18.0% 3.4 Oil service company especially sensitive to new oil exploration
Genentech (DNA) $84.33 $100.20 $54.68 71 29.0% 3.6 Original biotech company now boasts 11 successful products
Comcast (CMCSA) $26.66 $34.50 $25.35 63 15.0% 4.7 New services will drive growth for No. 1 cable company
Viacom B (VIA.B) $38.47 $44.90 $37.67 N/A N/A% N/A Viacom's decision to split the company in two could eventually realize hidden value, but hasn't yet.
Note: P/E based on earnings for the past 12 months. Growth based on earnings projections for the next five years.


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