Our Top Picks for 2002 smith barney sent this i my e-mail(freebie) so i will let all consider it,FWIW:) salomonsmithbarney.com
Printable Version
Economic and Market Analysis
Equity Strategy
Our Top Picks for 2002
An Investor's Guide to Top Picks Technically Rated "1"
Top Picks on Salomon Smith Barney's Equity Strategists' Lists
Looking for Yield
Top Picks with 2002 Earnings Estimates Above Street Consensus
Top Picks with the Highest Five-Year EPS Growth Projections
Top Picks with the Lowest 2002 P/E vs. Five-Year EPS Growth Rates
Investors Have Reason to be Optimistic this New Year
Despite continued signs of a slower economy and stock market returns down for the year as a whole, we believe there are many reasons to be optimistic about the equities market this year. Stocks have ended 2001 on an upward path. The earnings revision picture is showing a marked improvement compared to the last several months.And, most measures of investor confidence have also ended 2001 on a brighter note. So, if you're ready to return to equity investing and need some guidance, or if you're participating in the stock market for the first time, this report can help. It provides a list of stocks we believe show the most promise for 2002.
In this special report, Salomon Smith Barney's Equity Research team (ranked #1 by both The Wall Street Journal and Institutional Investor)* has identified what they believe are the most promising stocks in more than 70 industries-including those with the highest yield potential and attractive prospects for long-term growth. You'll also read about our outlook for the overall economy and interest rates.
*Analysts recognized by the June 26, 2001 Wall Street Journal's "Best of the Street" Survey. The Wall Street Journal is a trademark of Dow Jones L.P.
Economic and Market Analysis: Turn the Page
Mitchell J. Held, Managing Director
Most Americans were probably relieved to turn over the final page of the 2001 calendar and see the first new page of 2002. In obvious and not-so-obvious ways, 2001 was not a good year. First, the events of September stand alone. Next, perhaps, was the "recession" label that was branded on the economy (six months after the fact, of course). In the September/October period, the unemployment rate jumped, the consumer seemed destined to hide at home, capital spending fell off the prover-bial cliff, inventories were liquidated at an alarming rate and parallels were quickly being drawn between the U.S. economy and that of Japan, where "ZIRP," the zero-interest-rate policy, has been unable to shake the world's second-largest economy from further contraction. The bull market of the last 20 years rapidly faded from memory.
As if to compound the problem, Congress became so caught up in partisan bickering that a potential economic stimulus bill failed to gather support and proved fleeting as the year came to an end. In spite of some hopeful signs of a bottoming in economic activity, attention once again turned away from the recovery (how soon, how fast?), back to the recession (how long, how deep?). Still, things are very different today. As tough as it is to focus on the positive, let's shift our attention to some of the more favorable things that happened in 2001.
Short-term interest rates are nearly 500 basis points lower than they were at this time last year.
The Federal Reserve may drop rates again at the end of January. Remember, it takes time, perhaps more than a year, for the full impact of lower short-term interest rates to hit the economy. 2002 should be the year. Keep in mind that the push for greater monetary stimulus has not only happened here, it's happened overseas as well and, with a lag, should help boost the economies of many of our major trading partners as well.
Fiscal stimulus should not be measured by major stand-alone stimulus bills alone.
Remember, over $35 billion was placed directly into consu-mers' pockets by way of the tax rebate. Post-September 11 emergency spending has risen by at least that amount, on top of a clear pre-September 11 acceleration of federal discre-tionary spending that has been underway since the final year of the Clinton Administration. Stimulus bill or no stimulus bill, there has been a clear tilt towards positive fiscal stimulus.
Furthermore, economies are not stimulated by policy decisions alone.
According to the Consumer Price Index (CPI), gasoline prices and fuel oil prices have dropped by more than 20% in the twelve months ended November and the slide is not yet over. The combination of warmer temperatures and lower oil and gas prices has taken a huge chunk out of consumers' energy bills and placed it directly into consumers' (spendable) pockets. Energy price declines recorded so far should have the same impact on the economy as a $50 billion-plus tax cut.
Americans refinanced their mortgages in record numbers in late-October and early-November.
This improved not only their balance sheet but also their cash flow, with the potential of directing some of that back into the economy. Record corporate bond issuance has had the same impact on many corporations, an important precondition for economic recovery. Corporate balance sheets also have bene-fited from aggressive inventory liquidation, clearing away an old excess that should no longer impair growth.
And let's not forget the stock market.
Although returns are down for the year as a whole, they've ended the year on an upward path, offsetting some of the adverse impact on confidence that the "bear" market other-wise would inflict upon an economy. Indeed, most confidence measures ended last year on a much brighter note.
Our Forecast
Our forecast calls for a modest decline in real GDP in the final quarter of 2001 followed by a similarly modest rise in the first quarter of this year. We believe growth will pick up to roughly 3% in the second quarter and 5%+(plus) in the second half of the year before retreating to what we consider to be trend growth of 3% to 4% or so in 2003. Inflation is expected to remain at bay. Bond yields may have touched bottom but there are no signs yet that support a significant rise in medium-term or long-term interest rates. Returns temporarily may fall below historic norms. With returns on cash under 2%, your money may be guaranteed to double every 40 years or so, but that's a bit longer than most investment time horizons.
Will equities provide an above-normal return in 2002? No guarantees of course, but an economy benefiting from monetary-led, low-inflation, early-cycle acceleration in growth that typically disproportionately adds to the bottom line is the economic background in which equity investments typically thrive.
Equity Strategy: Looking for Improvement
John L. Manley, Jr., CFA
If the last two years have taught us anything, it is that future events are hard to predict from a distance. Flexibility and a willingness to admit error are essential qualities for investors, as well as for the managers of the companies in which they invest. What we can hope to achieve is a sense of context.While we may not be able to fully describe the future, we believe an understanding of the past and a measured awareness of the present can allow us to recognize those parts of the current Wall Street consensus that are either poorly reasoned or in conflict with the facts. We can seek to identify extreme opinions that have gained currency and then move against them.
2001: A Year of Extremes
To us, the basic tone of the equity market in 2002 will be set by the extremes in 2001.The events of September 11, in our opinion, acted as a purge for a marketplace already uncom-fortable with its own fundamentals. It was a market that had already declined for 18 months before these events. After one week of trading following September 11, the S&P 500 had declined to a point at which its underperformance relative to the bond market (based on a five-year moving average) approached 30%. Such underperformance had only been seen once before in the 20th century: at the bottom of the 1973 - 74 bear market. To us, stocks underperform bonds when earn-ings, earnings growth expectations and confidence in those expectations decline. The decline in performance is propor-tional to the decline of expectations and confidence.
We believe, therefore, that on September 21, the equity market was reflecting as big a drop in sentiment as had occurred at any time in the second half of the 20th century. Markets behave in strange ways after dramatic shifts in senti-ment. As we learned in 2000, after a large rise in expectations, incremental good news has little impact on the market, while incremental bad news can seem to have a disproportionately large impact. The reverse now seems to be occurring after a large drop in those same expectations.
Good News for an Erratic Market
Two years ago, a legitimate concern was the fact that many portfolio managers had never seen a "bear" market. If that was indeed true (and it appears to have been the case), then those same managers have never seen the end of a "bear" market. Much has been made of the market's spectacular rise in the last three months. Seldom mentioned is the fact that the S&P 500 is still down from its 12-month average. In the past, this tumultuous situation (up more than 20% from its 12-month low but still lower than its 12-month average) has occurred only ten times.We point out that, in nine of those ten times, the market was higher six months later, and that the average price gain in those ten periods was more than double the norm.This kind of rapid rebound from a depressed level has usually carried on, but it is not the consensus today.
A Closer Look at Investor Sentiment
In the most basic sense, two things are necessary for a market to rise: money and reasons to invest it. The money has been there for some time. Throughout 2001, the Federal Reserve cut rates, which are now at a level that, historically, has been low enough to restart the economy. What has been absent is a reason to invest. The seeming endless stream of downward revisions to earnings estimates has fueled selling and made the diminishing (but still positive) returns on cash seem attractive. This has been a frustrating experience. However, once expectations have bottomed and begin to recover, those diminished cash returns could seem quite inadequate. Market and sector valuations may seem to be impediments, but rising expecta-tions can push valuation concerns to the back burner and keep them there for some time. It has been our experience that valuation extremes (either good or bad) only become a major problem once the factors that created them go away.
We believe investors should invest in cyclically affected groups and sectors for the year ahead. As mentioned before, we believe expectations and confidence have declined by near-record amounts. While a rebound (or recovery) has apparently begun, the numbers still appear to us to be quite low. However, the earnings revisions picture appears to be improving on both the macro and micro levels.
A Closer Look at Earnings Revisions
In October, analysts as a whole cut their expectations at a record pace. As we suspected, this appears now to have been a low for this indicator. The current earnings revision picture shows a marked improvement in the last several months. December in particular, normally a "preannouncement" month, has produced few projected shortfalls, and many key companies, have actually given encouraging reports. What's more, lows in downward estimate revisions have tended to coincide with market "troughs" and troughs in perceptions of the economy. It is important to note that comparable lows were reached in mid-1982 and late 1998.A higher low (but a low nevertheless) occurred in mid-1990. In general, analysts seem to be rising from the depths of despair and capitulation, although there appears to be room left for improvement.
This improvement in earnings revision numbers for the entire market holds true among key groups and sectors as well. Therefore, armed with the early signs of recovery and mindful of today's market perceptions (correct or otherwise) we enter 2002 with confidence and a sense of hope.
Our Top Picks for 2002
Price Annual Earnings Per Share P/E Ratios 5-Yr. EPS Growth
Name Ticker Rating 12/20/01 52-week Range Next (E) Cur (E) Prior (A) Next (E) Cur (E) (Est.) Dividend Yield
Adobe Systems Incorporated ADBE 2H $30.67 $65.50 - $22.84 $1.25 $1.00 $1.15 24.5 30.7 23% – –
Air Products & Chemicals Inc. APD 1M $47.64 $48.00 - $33.59 NA $2.70 $2.40 NA 17.6 NA – –
Alcoa Inc.# AA 1M $34.92 $45.36 - $28.30 $2.15 $1.43 $1.81 16.2 24.4 15% $0.60 1.7%
Altera Corporation ALTR 1H $19.82 $34.31 - $15.38 $0.23 $0.33 $0.94 86.2 60.1 25% – –
Amer. Elect. Power Co. Inc.# AEP 2M $42.58 $51.11 - $39.81 $3.70 $3.40 $2.70 11.5 12.5 7% $2.40 5.6%
American Express Company AXP 1M $33.55 $55.94 - $25.61 $1.90 $1.01 $2.06 17.7 33.2 13% $0.32 1.0%
AmerisourceBergen Corp. ABC 1H $61.69 $71.30 - $42.06 NA $2.90 $2.29 NA 21.3 16% – –
Amgen Inc. AMGN 1M $57.80 $74.19 - $51.51 $1.43 $1.19 $1.05 40.4 48.6 19% – –
Analog Devices, Inc. ADI 1H $42.97 $62.60 - $30.99 $1.13 $0.65 $1.11 38.0 66.1 25% – –
Apache Corp.# APA 1M $51.25 $66.53 - $35.23 $2.18 $6.01 $5.73 23.5 8.5 NA $0.28 0.5%
Avery Dennison Corp. AVY 1H $55.95 $60.24 - $44.39 $2.55 $2.46 $2.84 21.9 22.7 12% $1.23 2.2%
Biovail Corporation BVF 1H $55.23 $56.00 - $29.60 $1.80 $1.33 $0.85 30.7 41.5 40% – –
BMC Software, Inc. BMC 1H $16.58 $32.13 - $11.90 $0.56 $0.26 $0.79 29.6 63.8 15% – –
BorgWarner BWA 1M $50.13 $54.50 - $36.49 $3.30 $3.15 $4.87 15.2 15.9 10% – –
BROCADE Communications BRCD 1H $31.60 $109.64 - $12.90 NA $0.30 $0.28 NA 105.3 40% – –
Bunge Limited# BG 1H $22.50 $24.15 - $15.85 $1.85 $1.72 $0.35 12.2 13.1 7% $0.10 0.4%
Canadian National Railway Co. CNI 1M $46.90 $48.29 - $28.88 $3.45 $3.07 $2.97 13.6 15.3 10% $0.80 1.7%
Cendant Corporation# CD 1H $19.45 $21.53 - $9.38 $1.27 $1.04 $0.91 15.3 18.7 13% – –
Centex Corp.# CTX 1H $55.34 $58.17 - $29.15 $7.30 $6.00 $4.65 7.6 9.2 12% $0.16 0.3%
ChevronTexaco Corp. CVX 1L $87.40 $98.03 - $78.77 $4.80 $6.85 $8.13 18.2 12.8 NA $2.80 3.2%
Coach Inc. COH 1H $36.68 $42.20 - $21.90 $1.92 $1.64 $1.50 19.1 22.4 17% – –
Comcast Corporation# CMCSK 1H $35.79 $45.88 - $32.51 – – – – – 14% – –
Comerica# CMA 1M $56.51 $64.95 - $44.66 $5.15 $4.75 $4.63 11.0 11.9 8% $1.76 3.1%
Comm. Health Systems, Inc.# CYH 1H $24.19 $36.55 - $22.00 $0.62 $0.46 $0.14 39.0 52.6 25% – –
Compaq Computer# CPQ 1H $9.12 $24.58 - $7.66 $0.16 $0.06 $0.99 57.0 152.0 10% – –
Continental Airlines Inc. CAL 1H $23.90 $56.50 - $13.00 $1.00 $(5.30) $5.45 23.9 (4.5) NA – –
Convergys Corporation# CVG 1H $36.93 $49.99 - $24.80 $1.45 $1.25 $1.23 25.5 29.5 23% – –
Crown Castle Int'l Corp. CCI 1H $10.01 $29.63 - $7.51 $0.16 $(0.34) ($0.03) 62.6 (29.4) NA – –
Darden Restaurants DRI 1H $35.13 $36.36 - $19.70 $2.10 $1.82 $1.59 16.7 19.3 17% – –
Deere & Company# DE 1H $42.20 $46.63 - $34.60 NA $1.10 $0.64 NA 38.4 NA $0.88 2.1%
Dillard's Inc. DDS 1H $15.59 $22.00 - $11.31 $1.40 $0.60 $1.47 11.1 26.0 10% $0.16 1.0%
E.W. Scripps Company SSP 1M $66.30 $71.27 - $56.47 $2.17 $1.78 $2.20 30.6 37.2 12% $0.60 0.9%
El Paso Corporation# EPG 1H $45.00 $74.50 - $38.60 $3.40 $3.35 $2.69 13.2 13.4 15% $0.82 1.8%
Engelhard Corp.# EC 1H $27.69 $28.73 - $19.27 $1.89 $1.70 $1.90 14.7 16.3 10% $0.40 1.4%
Flextronics International# FLEX 1H $22.99 $39.81 - $13.00 $0.92 $0.66 $0.88 25.0 34.8 25% – –
Ford Motor Co. # F 1M $15.25 $30.71 - $14.93 $1.80 $(0.72) $2.80 8.5 NM 5% $0.60 3.9%
GlobalSantaFe Corp. GSF 1M $27.36 $41.89 - $19.40 $1.90 $1.32 $0.66 14.4 20.7 NA – –
Home Depot, Inc. HD 1M $50.31 $53.45 - $32.80 $1.50 $1.27 $1.10 33.5 39.6 18% $0.16 0.3%
International Game Technology IGT 1H $66.55 $69.26 - $38.90 $3.55 $3.15 $2.80 18.7 21.1 15% – –
Interpublic Gp of Comps, Inc. IPG 1M $27.85 $47.19 - $19.30 $1.15 $0.99 $1.51 24.2 28.1 15% $0.38 1.4%
Kraft Foods Inc.# KFT 1M $34.05 $35.39 - $29.94 $1.45 $1.18 $0.95 23.5 28.9 NA $0.52 1.5%
Liberty Media Corporation LMCA 1M $13.45 $17.75 - $10.95 NA NA NA NA NA 20% – –
Lincoln National Corp.# LNC 1M $47.89 $52.55 - $39.10 $4.00 $3.43 $3.69 12.0 14.0 13% $1.28 2.7%
Manpower, Inc.# MAN 1H $33.61 $38.00 - $24.35 $1.60 $1.62 $2.22 21.0 20.7 15% $0.20 0.6%
Mattel, Inc.# MAT 2M $17.27 $19.75 - $13.70 $0.95 $0.79 $0.69 18.2 21.9 15% $0.05 0.3%
MDU Resources Group, Inc. MDU 1M $26.25 $40.23 - $22.80 $2.00 $2.15 $1.80 13.1 12.2 10% $0.92 3.5%
Medtronic, Inc. MDT 1M $46.00 $61.00 - $38.99 $1.43 $1.22 $1.05 32.2 37.7 18% $0.20 0.4%
Merrill Lynch & Co. MER 1H $51.68 $80.00 - $36.01 $2.89 $2.44 $4.11 17.9 21.2 13% – –
Northern Border Ptners, L.P.# NBP 1M $37.02 $41.01 - $30.25 $2.70 $2.36 $2.50 13.7 15.7 8% $3.05 8.2%
Northrop Grumman Corp. NOC 1M $98.06 $108.97 - $77.00 $3.20 $4.97 $8.82 30.6 19.7 0% $1.60 1.6%
Novellus Systems NVLS 1H $38.70 $58.09 - $26.40 $0.17 $1.35 $2.38 NM 28.7 20% – –
Openwave Systems OPWV 1H $8.85 $72.00 - $6.64 $0.33 $(0.21) $0.25 26.8 NM 49% – –
Pfizer# PFE 1L $41.40 $46.13 - $35.67 $1.60 $1.31 $1.02 25.9 31.6 17% $0.36 0.9%
Philip Morris Cos. Inc. MO 1S $46.27 $53.00 - $40.13 $4.91 $4.05 $3.71 9.4 11.4 10% $2.32 5.0%
Procter & Gamble# PG 1M $80.99 $81.46 - $56.64 $3.73 $3.46 $3.25 21.7 23.4 10% $1.52 1.9%
QUALCOMM, Inc. QCOM 1H $49.56 $89.88 - $38.46 $1.35 $1.13 $0.98 36.7 43.9 0% – –
Riverstone Networks# RSTN 1S $15.05 $23.66 - $5.25 $0.28 $0.05 $(0.37) 53.8 NM 75% – –
Smith International SII 1M $50.38 $83.89 - $33.43 $2.40 $3.05 $1.45 21.0 16.5 NA – –
Symantec Corporation SYMC 2H $64.12 $73.41 - $30.94 $2.88 $2.30 $2.35 22.3 27.9 10% – –
Tiffany & Co. TIF 2M $29.11 $37.59 - $20.76 $1.16 $1.09 $1.26 28.9 30.7 17% $0.16 0.5%
Trigon Healthcare TGH 1H $67.85 $77.81 - $48.10 $4.63 $4.10 $3.28 6.3 7.1 15% – –
Triton PCS TPC 1S $28.91 $45.69 - $28.20 $(2.21) $(3.00) -$3.03 NM NM NA – –
Tyco International Ltd. TYC 1M $57.40 $62.80 - $40.80 $4.35 $3.70 $2.75 6.6 7.8 20% – –
Vignette Corp. # VIGN 1H $4.97 $19.44 - $3.38 $(0.02) $(0.13) $0.00 NM NM NA – –
Vornado Realty Trust# VNO 1M $40.99 $41.60 - $34.56 $4.41 $3.87 $3.46 1.1 1.3 NA $2.64 53.1%
The Walgreen Company WAG 1M $33.50 $45.27 - $30.98 $0.85 $1.02 $1.18 39.4 32.8 16% 14.0% 0.4%
The Walt Disney Co.# DIS 1M $20.55 $34.50 - $16.98 $0.85 $0.60 $0.98 24.2 34.3 11% 23.0% 1.1%
Waste Management, Inc.# WMI 1H $30.94 $31.71 - $23.01 $1.72 $1.26 $1.20 18.0 24.6 14% $0.01 NM
Wells Fargo# WFC 1L $43.74 $55.75 - $38.85 $3.30 $2.66 $2.53 13.3 16.4 13% $0.98 2.2%
Weyerhaeuser Co. WY 1M $53.68 $62.05 - $45.70 $1.60 $1.85 $4.19 33.6 29.0 NA $1.60 3.0%
Willis Grp Holdings Limited# WSH 1H/ $23.54 $25.02 - $16.20 $1.25 $0.95 $0.07 18.8 24.8 15% – –
WorldCom Group# WCOM 1M $14.30 $23.25 - $12.18 $0.95 $1.05 $1.30 15.1 13.6 12% – –
Yahoo! Inc. YHOO 1H $16.22 $42.88 - $8.11 $0.10 $0.05 $0.47 162.2 NM 21% – –
An Investor's Guide to Top Picks Technically Rated "1"
We believe investors who approach Top Picks on a disciplined basis should be able to find stocks that best fit their investment goals/risk tolerance. The following is a handy reference guide to help you focus on the specific stocks that may be appropriate for you.
These Top Picks are currently rated "1" (our highest rating) by our Technical Research Department.When two different disciplines agree on a stock, we think the chances of appreciation increase. Importantly, during the year, a number of our Top Picks should have positive (in some instances, negative) moves in our technical rating. Investors should pay close attention to these changes.
Top Picks on Salomon Smith Barney Equity Strategists' List
This sort identifies the stocks where one or more of our equity strategists is concurring with our analysts' opinion. As in a number of other sorts, we recommend that investors focus on the changes in opinion by our strategists on Top Picks selections.
Looking for Yield
These are the 13 highest-yielding stocks on the 2002 Top Picks list.We also provide a projected dividend growth rate on each stock. The average yield for these 13 stocks is 3.97%. We project a 6.8% average dividend growth rate for them. This compares to a yield for the S&P 500 of about 1.4%, with projected dividend growth of about 4.4%.Total return and yield-oriented investors should focus on this subset of Top Picks.
Our Top Picks with 2002 Earnings Estimates Above Street Consensus
Investors should identify stocks where positive EPS surprises occur. Below are the Top Picks with our earnings estimates above street consensus. As year-end results for last year are announced, we should see more changes in our analyst estimates for Top Picks, compared to consensus.
Our Top Picks with the Highest Five-Year EPS Growth Projections
These 32 Top Picks have a projected five-year earnings per share (EPS) growth rate of 15% or more. We believe investors should consider them for their long-term growth potential. Each stock in this subset could well be a best performer for the year-providing it meets or beats our EPS estimates for the year. Therefore, investors should focus on any changes in our analysts' EPS estimates for the year ahead.
Our Top Picks with the Lowest 2002 P/E vs. Five-Year EPS Growth Rates
These 20 Top Picks are selling at price/earnings (P/E) ratios at or below 1.3x our five-year EPS growth rate (P/E to G), significantly lower than the average of 2.0x for the entire Top Picks list. We would recommend that investors focus on individual stocks on this list as our EPS estimates are reaffirmed or increased.Those stocks that meet or beat EPS estimates should perform well.
Additional Information Available Upon Request
# Within the past three years, Salomon Smith Barney, including its parent, subsidiaries and/or affiliates, has acted as manager or co-manager of a public offering of the securities of this company.
Salomon Smith Barney ("SSB"), including its parent, subsidiaries and/or affiliates ("the Firm"), usually makes a market in the U.S.-traded over-the-counter securities recommended in this report and may sell to or buy from customers, as principal, securities recom-mended in this report. The Firm or employees preparing this report may have a position in securities or options of any company recom-mended in this report. An employee of the Firm may be a director of a company recommended in this report. The Firm may perform or solicit investment banking or other services from any company recom-mended in this report.
Securities recommended, offered or sold by SSB: (i) are not insured by the Federal Deposit Insurance Corporation; (ii) are not deposits or other obligations of any insured depository institution (including Citibank); and (iii) are subject to investment risks, including the possible loss of the principal amount invested. Although information has been obtained from and is based upon sources SSB believes to be reliable, we do not guarantee its accuracy and it may be incomplete or condensed. All opinions and estimates constitute SSB's judgment as of the date of the report and are subject to change without notice. This report is for informational purposes only and is not intended as an offer or solicitation for the purchase or sale of a security.
This report has been approved for distribution in the United Kingdom by Salomon Brothers International Limited, which is regulated by the Securities and Futures Authority. The investments and services contained herein are not available to private customers in the UK and South Africa. This report was prepared by SSB and, if distributed in Japan by Nikko Salomon Smith Barney Limited, is being so distrib-uted under license. This report is made available in Australia through Salomon Smith Barney Australia Securities Pty Ltd. (ABN 64 003 114 832), a Licensed Securities Dealer, and in New Zealand through Salomon Smith Barney New Zealand Limited, a member firm of the New Zealand Stock Exchange.This report does not take into account the investment objectives or financial situation of any particular person. Investors should obtain advice based on their own individual circumstances before making an investment decision. Salomon Smith Barney Securities (Proprietary) Limited is incorporated in the Republic of South Africa (company registration number 2000/025866/07) and its registered office is at Grosvenor Corner, 195 Jan Smuts Avenue, Rosebank, 2198, Republic of South Africa.
Guide to Investment Ratings:
RANK is a guide to the expected total return over the next 12 - 18 months. The total return required for a given rank depends on the degree of risk (see below) in a stock. The higher the risk, the higher the required return. For example, a 1 (Buy) rating indicates a total return ranging from 15% or greater for a low-risk stock to 30% or greater for speculative stocks. Estimated returns for other risk cate-gories are scaled accordingly. RISK takes into account predictability of earnings and dividends, financial leverage and stock price volatility. L (Low Risk): predictable earnings and dividends, suitable for conserva-tive investors. M (Medium Risk): moderately predictable earnings and dividends, suitable for average equity investors. H (High Risk): earn-ings and dividends are less predictable, suitable for aggressive investors. S (Speculative): very low predictability of fundamentals and a high degree of volatility, suitable only for investors/traders with diversified portfolios that can withstand material losses. V (Venture): indicates a stock with venture capital characteristics that is suitable for sophisti-cated investors with a high tolerance for risk and broadly diversified investment portfolios. A thorough explanation of the ratings system is available upon request.
Investing in non-U.S. securities, including ADRs, by U.S. persons may entail certain risks.The securities of non-U.S. issuers may not be regis-tered with, or be subject to, the reporting requirements of, the U.S. Securities and Exchange Commission.There may be limited informa-tion available on foreign securities. Foreign companies are generally not subject to uniform audit and reporting standards, practices and requirements comparable to those in the U.S. Securities of some foreign companies may be less liquid and their prices more volatile than securities of comparable U.S. companies. In addition, exchange rate movements may have an adverse effect on the value of an invest-ment in a foreign stock and its corresponding dividend payment for U.S. investors. Investors who have received this report from the Firm may be prohibited in certain U.S. states from purchasing securities mentioned in this report from Salomon Smith Barney. Please ask your Financial Consultant for additional details.
All rights reserved. Any unauthorized use, duplication or disclosure is prohibited by law and will result in prosecution.
©2002 Salomon Smith Barney Inc. All rights reserved. Member SIPC.
Terms and Conditions | Privacy Policy |
