FORTUNE MAGAZINE:
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Fortune 40: Stocks to retire on
Our trademark equity portfolio rocked - again - in the past year. We've updated the selection to keep these stones rolling into the future.
By David Stires, Fortune Magazine writer

Will the Dow and the S&P 500 go back to their record-setting ways? Is the recent weakness the start of something much worse? With the fate of the bull market hanging in the balance, this is a perfect time to revisit the Fortune 40, the portfolio we've designed - and recalibrated annually - to help you thrive in markets both rocky and calm, and build for retirement.

Our 40 favorites turned in a banner year, trouncing even the S&P's glitzy performance. From June 2, 2006 to June 1, 2007, our diversified group returned 27.4%, compared with 21.5% for the S&P. Since its inception in 2002, the Fortune 40 has delivered an 18.3% annualized return, easily besting the S&P's 14.7%. (See returns for all of last year's list)

This year, we've created five mini-portfolios: Growth and income; bargain growth; deep value; small wonders; and foreign value. Together they comprise a diversified portfolio.

We started with virtually the entire market and narrowed the field by running a grueling series of screens based on each experts' methods. We focused on companies whose shares appear cheapest relative to their long-term growth prospects. We combed through SEC filings, scoured analyst reports, and grilled large shareholders. We favored stocks that are also owned by fund managers with demonstrated records of success.

The table below lists all 40. Click on tabs for more on each category.

Growth and Income  
Company
(Ticker symbol)
Current
price
52-wk
high
52-wk
low
Market
Cap (mill)
Div
Yield
P/E
Ratio
Earnings
growth
Abbott Labs (ABT) $52.25 $56.79 $41.27 $81,123.27 3.4% 21.8 11%
Altria (MO) $21.04 $21.20 $16.06 $43,774.39 6.7% 13.8 8%
Coca-Cola (KO) $54.78 $59.45 $42.00 $126,274.69 3.2% 21.2 9%
Colgate-Palmolive (CL) $84.72 $87.39 $57.15 $41,700.62 2.5% 22.4 11%
General Mills (GIS) $70.32 $73.95 $48.51 $23,328.90 2.8% 18.8 8%
Johnson & Johnson (JNJ) $65.13 $65.95 $50.12 $179,521.34 3.0% 15.8 9%
Procter & Gamble (PG) $62.72 $64.58 $46.98 $182,176.07 2.8% 21.6 11%
Current price, 52-week high/low and market cap as of Apr 13 10:00
P/E based on earnings for the last 12 months.
Earnings growth based on analyst projections for the next five years, according to Baseline.
Bargain Growth  
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) $83.59 $85.17 $51.63 $59,509.73 18.5 1.6 11% 0.18
AIG (AIG) $40.89 $55.90 $8.22 $5,517.12 11.4 1.0 11% 0.2
Accenture (ACN) $42.99 $43.89 $26.33 $30,687.84 21.7 1.4 14% 0
Chubb (CB) $51.53 $53.79 $38.00 $16,931.44 9.5 1.0 10% 0.24
ConocoPhillips (COP) $56.00 $56.17 $37.52 $85,506.34 8.4 1.2 8% 0.28
McKesson (MCK) $65.29 $66.98 $34.41 $17,588.60 20.9 1.4 14% 0.29
Microsoft (MSFT) $30.26 $31.50 $18.47 $265,394.15 21.3 1.6 13% 0
United Health (UNH) $32.34 $36.07 $21.95 $37,434.62 17.7 1.0 15% 0.26
Current price, 52-week high/low and market cap as of Apr 13 10:00
P/E based on earnings for the last 12 months.
Earnings growth based on analyst projections for the next five years, according to Baseline.
Deep Value  
Company
(Ticker symbol)
Current
price
52-wk
high
52-wk
low
Market
Cap (mill)
Div
Yield
P/E Current
ratio
Aetna (AET) $32.55 $35.96 $21.55 $14,029.05 0.1% 17.7 2.5
Applied Industrial Tech (AIT) $25.97 $26.29 $18.11 $1,100.35 2.3% 15.6 2.6
Carpenter Technology (CRS) $38.25 $39.11 $16.25 $1,682.08 1.9% 13.4 4.0
Lufkin Industries (LUFK) $85.46 $86.52 $29.51 $1,275.92 1.2% 13.2 4.0
Pfizer (PFE) $17.17 $20.36 $12.75 $138,527.20 4.2% 12.3 2.2
Tidewater (TDW) $49.12 $52.05 $40.20 $2,540.34 2.0% 12.0 4.8
VF Corp.  (VFC) $84.10 $84.30 $53.27 $9,302.30 2.9% 18.6 2.5
Current price, 52-week high/low and market cap as of Apr 13 10:00
P/E based on earnings for the last 12 months.
Earnings growth based on analyst projections for the next five years, according to Baseline.
Small Wonders  
Company
(Ticker symbol)
Current
price
52-wk
high
52-wk
low
Market
Cap (mill)
P/E
ratio
Return
on assets
Free Cash
Flow
CSG Systems International (CSGS) $21.26 $22.29 $12.83 $724.20 19.3 9% $82 million
K-Swiss (KSWS) $13.00 $13.41 $7.43 $456.79 13.9 19% $62 million
Navigant Consulting (NCI) $12.16 $15.59 $11.32 $607.78 20.4 9% $56 million
Park Electrochemical (PKE) $28.11 $29.69 $17.09 $577.41 16.4 9% $6 million
Penn Virginia Resource (PVR) $23.59 $24.93 $11.60 $1,221.83 19.0 10% $31 million
Plexus (PLXS) $36.53 $38.00 $15.50 $1,452.94 13.4 10% $71 million
Current price, 52-week high/low and market cap as of Apr 13 10:00
P/E based on earnings for the last 12 months.
Earnings growth based on analyst projections for the next five years, according to Baseline.
Foreign Value  
Company
(Ticker symbol)
Current
price
52-wk
high
52-wk
low
Market
Cap (mill)
P/E
ratio
Div
Yield
Earnings
growth
Diageo (DEO) $71.64 $70.96 $45.33 $44,865.80 23.4 2.9% 11%
Novartis (NVS) $53.64 $56.42 $35.20 $141,476.82 17.5 1.7% 12%
Petroleo Brasileiro (PBR) $43.62 $53.46 $31.04 $110,649.70 11.2 0.6% 15%
Sanofi-Aventis (SNY) $37.43 $41.59 $25.57 $98,688.15 10.9 1.7% 7%
Total (TOT) $59.35 $67.52 $45.02 $139,378.91 10.7 2.8% 8%
UBS (UBS) $17.12 $19.32 $9.98 $60,914.24 13.3 2.0% 14%
Unilever (UL) $30.16 $32.41 $18.25 $38,709.12 19.7 2.1% 12%
Vodafone Group (VOD) $23.01 $24.04 $17.68 $121,123.72 14.1 4.2% 6%
Current price, 52-week high/low and market cap as of Apr 13 10:00
P/E based on earnings for the last 12 months.
Earnings growth based on analyst projections for the next five years, according to Baseline.



Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer LIBOR Warning: Neither BBA Enterprises Limited, nor the BBA LIBOR Contributor Banks, nor Reuters, can be held liable for any irregularity or inaccuracy of BBA LIBOR. Disclaimer. Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.
Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer LIBOR Warning: Neither BBA Enterprises Limited, nor the BBA LIBOR Contributor Banks, nor Reuters, can be held liable for any irregularity or inaccuracy of BBA LIBOR. Disclaimer. Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.