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Politics : Idea Of The Day -- Ignore unavailable to you. Want to Upgrade?

To: Lee who wrote (22669)	1/15/1999 1:58:00 PM
From: IQBAL LATIF	Read Replies (1) \| Respond to of 50167

Great round up by Queen Abbey--now the picks of the other lady.. THE BEST INVESTMENTS FOR 1999 -- DECEMBER 1998 Top Choices Company Price as of 11/20/98 Curr. Price* % Change Forward P/E 3-5 Yr. Est. EPS Growth 52-Week High* 52-Week Low*** Industry Wells Fargo (WFC) 39.88 36.00 -10% 18 14% $43.87 $27.50 Banking Compaq Computer (CPQ) 34 45.50 34% 83 19% 38.18 22.93 Computer Hardware Kohl's Corp. (KSS) 49 62.00 27% 56 23% 58.93 31.31 Department Stores D.R. Horton (DHI) 18.94 21.38 13% 13 19% 24.93 10.62 Home Building Guidant Corp. (GDT) 87.88 109.19 24% 44 22% 90.06 51.00 Medical Devices Warner-Lambert (WLA) 79.63 69.94 -12% 51 24% 85.93 36.16 Pharmaceuticals Average % Change 13% * as of 1/15/1999 1:50 PM Based on consensus EPS estimate for next fiscal year. As of 11/20/98. Runners-Up Company Price as of 11/20/98 Curr. Price % Change Forward P/E 3-5 Yr. Est. EPS Growth 52-Week High* 52-Week Low*** Industry Bank One (ONE) 52.81 53.81 2% 16 14% 65.62 36.06 Banking Apple Computer (AAPL) 35.31 40.31 14% 15 14% 43.75 12.75 Computer hardware Dollar General (DG) 24.94 25.00 0% 30 23% 37.8 19.6 Department stores Toll Brothers (TOL) 23.75 23.75 0% 10 15% 31.62 17.37 Home building Pfizer (PFE) 111.88 115.44 3% 56 20% 121.75 69.56 Pharmaceuticals Average % Change 4% * as of 1/15/1999 1:51 PM Based on consensus EPS estimate for next fiscal year. *As of 11/20/98. THERE'S BEEN something almost...distressing about the market's year-ending mega-rally. Sure, as an investor you had to love seeing stocks bounce back so smartly after the punishing summer and early fall. But by the same token, the recovery also means you've got to live with this awful truth: You just missed out on a spectacular buying opportunity. Think about it. You could have had Cisco Systems (CSCO) at its low point in October for 44. It doubled by late November. This only makes it harder to decide where you're going to invest that year-end bonus now. You could always bet it on the big, well-known names that have been carrying this market for so long (even though their prices are bordering on the insane). Then again, you could try burrowing around among the truly undervalued stocks of the world -- oil-services companies, for instance -- in the desperate hope that they'll finally recover this year. Or maybe you'd rather just keep your new money out of the market entirely, hoping and praying for some kind of a crash that will let you get back in on the cheap. We select none of the above -- because we've got a stock-picking methodology that doesn't force us to choose from among those three evils. Instead, our system directs us toward high-quality, growing companies that are trading at a discount to their historical norms. And believe us, they're out there: Our 11 best bets are in the tables above (six top choices and five runners-up). We've also identified a pair of fixed-income choices. Methodology This is a system we've used ever since our first annual investment forecast issue, back in 1993. It's based on a sector-analysis strategy that was pioneered by investment guru Elaine Garzarelli. The idea is that you make the most money by investing in sectors -- or industries -- where stocks are selling at a discount to their historical norm and where earnings are expected to rise in the coming year. No, our system isn't foolproof. We learned that last year, when our Best Investment ideas for 1998 underperformed the Standard & Poor's 500-stock index by 14 percentage points. (See "Update '98: Not Our Favorite Year.") But it's worth noting that our methodology has produced market-beating portfolios in five of the past six years. Our first step is to consult with Garzarelli, who tracks 66 market sectors. To identify the industries most likely to outperform in the months ahead, the former Lehman Brothers strategist compares the relative price/earnings ratio for each sector with its historical record, looking for industries trading at the low end of their typical P/E range or below it. She then throws out any sectors from this group that seem headed for profit declines in the next 12 months. This year, that included truck parts, textiles and household furnishings. The surviving sectors get ranked by the amount they could potentially move up. How does she know what their potential is? She checks to see what their highest valuation has been in the past. Click here for a complete listing of Garzarelli's sectors, along with their rankings. Of course, there's no guaranteed timetable for any sector's return to high-end valuations and the big stock gains that follow. This fact was underscored last year, when only eight of Garzarelli's top 25 sectors managed to do better than the S&P 500. This is where our reporting comes into play. We investigate conditions in each of the sectors by talking to industry analysts, fund managers, the companies' managers, their customers, independent consultants and industry statisticians. We look for answers about what's causing the relative underperformance and what the outlook is for reversing conditions in the near future. Our reporting suggests several broad themes for 1999: We believe consumers will keep spending, prolonging the record economic expansion. It appears the computer business will solve its recurring inventory gluts, at least for the next 12 months, while getting an extra lift as corporate customers replace old hardware to ward off Y2K or euro-conversion glitches. And the aging population will continue to look for more effective medical technology and drugs. With those trends in mind, we were drawn to six intriguing industries scattered throughout Garzarelli's list: banks, computers, department stores, home builders, medical devices and pharmaceuticals. (Recognizing that there are other sectors readers may want to know more about, this year we've also interviewed top analysts in five other key industries about what they see in the coming months.) As usual, we'll leave you with some cautionary advice. Even though we think our stocks will prosper in 1999, undervaluation in and of itself is not an indication that a stock's price will rise. Cheap stocks can get cheaper, especially when unforeseen events snuff out a firm's profits for a couple of quarters. In most cases, given enough time, quality stocks will bounce back, so your chance of profiting increases the longer you hold on to your investment. Finally, we picked these stocks using data current as of Nov. 20. Some of them -- most notably Compaq Computer (CPQ) -- have moved up sharply since then. In this Web version of the story, we've updated our discussions of the individual stocks where we felt necessary. Look also to the site for fresh updates in the weeks ahead.