(MONEY Magazine) – THIS MONTH: Earn 5% yields with a shot at 20% capital gains. Stocks soar 18.8% in La-La Land. What AT&T is now worth

IF YOU'RE LIKE MOST INVESTORS, NOTHING would make you happier than to buy a handful of top-quality growth stocks you could put away and not have to worry about. But finding today's true blue chips is harder than you might think. So we've done the work for you, screening the 1,000 largest U.S. companies in search of the strongest firms with the best growth prospects.

We wound up with a six-stock list that's striking in several respects: It does not include former market bellwethers such as General Motors and IBM. It also omits old-line smokestack companies such as Bethlehem Steel and Du Pont. In fact, our list consists only of stocks in three sectors that have great futures--computers, health care and fast food.

We began our screen by focusing on companies with rock-solid financial strength. We also favored firms that dominate their major businesses. But safety and size by themselves aren't enough--you also need growth. "A true blue-chip growth stock can double its earnings every five years. That's earnings growth of 14% to 15% a year," says Bill Staton, publisher of the yearly directory America's Finest Companies ($30; 800-779-7175).

Finally, we weeded out stocks with price/earnings ratios above 19, based on projected 1996 earnings. "People often think that fast growth will bail you out no matter how high P/Es are, but that's a mistake," says Andrew Engel, senior research analyst at the Leuthold Group in Minneapolis. "If growth slows, you can get hurt with high-priced stocks."

While the stocks that made our list are reasonably priced, two may post only single-digit share-price gains in the next 12 months. They offer something more important, however--profit growth averaging 14% or more over the next five years. Such rapidly rising earnings could double their share prices by the end of the decade.

Here's a closer look at the six companies, which are discussed in order of their potential total returns over the next 12 to 18 months:

Intel (ticker symbol: intc; NASDAQ, $60; 0.2% yield). The largest U.S. semiconductor manufacturer, $15.8 billion Intel gets the most enthusiastic analyst ratings of all the stocks on our list. "The company is very well managed, and it's extremely cheap at 12 times '96 earnings," says analyst John Laszlo of Paine Webber in New York City. "And earnings growth is likely to speed up to 20% a year in the future, vs. the company's historical 15%."

Analyst Mark L. Edelstone of Prudential Securities' San Francisco office agrees. He explains: "For Intel to have 20%-plus earnings growth, you need 15% increases in sales of the personal computers that use Intel's chips. PCs are surpassing that now, and their rapid sales growth will continue as the Internet gets more popular."

Based on personal computers' impressive growth outlook, both analysts see Intel's shares rocketing more than 50% to $95 within the next 18 months.

PepsiCo (PEP; NYSE, $51; 1.5%). Investors' fears of an economic slowdown next year could work to the benefit of defensive stocks like PepsiCo. "When the economy is slow, investors favor food and beverage companies because they can offer assured growth," says analyst John C. Maxwell at Wheat First Butcher Singer in Richmond. Among such issues, $31 billion PepsiCo looks like a great value. Soft-drink sales are growing at double-digit rates internationally. And the company's Pizza Hut restaurant chain is booming, thanks to the success of its new Stuffed Crust pizza, which has helped boost per-store sales 14% this year.

In addition, sales at PepsiCo's KFC (Kentucky Fried Chicken), which rose only 2% last year, are now growing twice as fast. "With strong international sales and a turnaround at KFC, PepsiCo could see its growth rate pick up to around 17%," says analyst Anton Brenner at UBS Securities in New York City.

He believes the stock could reach the low $60s within 15 months for a total return of more than 20%.

Johnson & Johnson (JNJ; NYSE, $74; 1.7%). "People keep talking about technology stocks, but they forget that the greatest technology in the U.S. isn't electronics but health care," says Oppenheimer chief investment strategist Michael Metz. And he adds: "Johnson & Johnson is one of the best general health-care firms." Among J&J's well-known products are first-aid items such as Band-Aids, best-selling prescription drugs like Retin-A and over-the-counter products like Tylenol.

The secret to the firm's high growth rate is its management style, according to analyst Daniel T. Lemaitre at Cowen & Co. in Boston. "The company is incredibly diversified, and it's run as 160 separate businesses rather than as a single firm," he explains. The result, says Lemaitre, are profit increases closer to those of a small growth company than to what you normally would expect from a $19 billion giant.

He figures J&J's shares could top $85 within 18 months for a total return of more than 17%.

Hewlett-Packard (HWP; NYSE, $83.25; 0.9%). "HP has a stable leadership position in a number of key computer businesses," says analyst Laura Conigliaro of Prudential Securities in New York City. Sales of the $30 billion company's PCs and some other computer lines (accounting for 18% of total revenues) are growing more than 40% annually, while printers (roughly 33% of revenues) are growing more than 25%. All in all, Conigliaro figures profits could increase at a 15% compound annual rate over the next three to five years.

Analyst Philip Rueppel at Alex. Brown & Sons' San Francisco office agrees. "In the computer universe, Hewlett-Packard is the best core holding," he says. "Its $5 billion PC and related businesses have 5% of the worldwide market today but could expand next year to $8.5 billion, or more than 7% of the market."

Rueppel thinks the stock could reach $95 in less than 18 months for a total return of more than 15%.

Merck (MRK; NYSE, $56; 2.4%). Many analysts would rate Merck as the world's best drug company. Not only is it the largest U.S. pharmaceutical firm, with annual sales of $16.3 billion, but also its track record in research is first rate, says Dean Witter analyst John Borzilleri. Merck currently has some impressive opportunities to earn big bucks on new or recent products. In particular, Borzilleri figures that Fosamax, a new drug to treat osteoporosis that was approved by the Food and Drug Administration in early October, could easily be a $1 billion seller by 1999. Also by that date, the cholesterol-lowering drug Zocor could grow to $3 billion in annual sales, up from a current $2 billion.

Merck also gained an advantage over its competitors with its shrewd 1993 acquisition of Medco, one of the largest pharmaceutical benefits-management (PBM) companies. (Such firms sell drugs in bulk to managed-care programs.) Experts note that when two competing drugs are equally effective, a captive PBM can favor the parent company's products.

Some analysts think Merck could return close to 15% over the next 18 months, but others say the shares are pricey and might manage only a single-digit gain. Nonetheless, the stock generally wins high marks for its five-year outlook.

McDonald's (MCD; NYSE, $38.25; 0.7% yield). The case for the world's premier burger flipper couldn't be simpler. McDonald's, with revenues of $9.5 billion, gets more than half its earnings from outside the U.S. "International is the crown jewel--it's expanding more than 20% a year," says analyst Peter Oakes at Merrill Lynch in New York City. Those foreign profits more than make up for the company's modest prospects in the U.S. "Thanks to foreign growth, McDonald's can maintain a 14% to 15% core growth rate, even though domestic profits are increasing less than 8% a year," says analyst Bruce E. Thorp at PNC in Philadelphia.

Thorp calculates that the stock is nearly fully valued on a short-term basis and may return less than 10% next year. But both analysts continue to recommend McDonald's as a five-year holding.