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FORTUNE MAGAZINE:
Retire Rich Full coverage
Fortune 40: Bargain growth
By David Stires, Fortune Magazine writer

The bargain growth collection below is premised on strategies used by Peter Lynch, the renowned ex-manager of Fidelity Magellan.

Lynch did not participate in our search process, but we based our screen on one of Lynch's favorite measures, the price/earnings-to-growth, or PEG, ratio: a company's P/E ratio divided by the rate at which its per-share earnings are projected to grow over the next three to five years.

We used it to hunt for what Lynch calls "stalwarts," blue chips whose shares could gain 30% to 50% over the next couple of years if they can be purchased at the right price.

Last year's bargain growth portfolio slightly outpaced the market, rising 23%.

Company
(Ticker symbol)
Current
price
52-wk
high
52-wk
low
Market
Cap (mill)
P/E PEG
Ratio
Earnings
growth
Debt/Equity
Ratio
3M (MMM) $76.63 $97.00 $72.05 $53,969.59 18.5 1.6 11% 0.18
AIG (AIG) $40.50 $72.97 $38.50 $101,080.35 11.4 1.0 11% 0.2
Accenture (ACN) $37.74 $44.03 $31.91 $29,420.93 21.7 1.4 14% 0
Chubb (CB) $52.90 $55.99 $45.65 $19,334.95 9.5 1.0 10% 0.24
ConocoPhillips (COP) $88.99 $90.84 $67.85 $137,262.36 8.4 1.2 8% 0.28
McKesson (MCK) $57.26 $68.43 $51.08 $15,877.00 20.9 1.4 14% 0.29
Microsoft (MSFT) $29.40 $37.50 $26.87 $273,810.81 21.3 1.6 13% 0
United Health (UNH) $33.10 $59.46 $32.32 $40,670.10 17.7 1.0 15% 0.26
Current price, 52-week high/low and market cap as of May 09 16:00
P/E based on earnings for the last 12 months.
Earnings growth based on analyst projections for the next five years, according to Baseline.



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