NEW YORK (Money Magazine) - If there is any way to beat the market over the long run, it consists of following the strongest, most secure stocks and trying to scoop them up when they are measurably undervalued.
There are surprisingly few such stocks that you need to follow on an on-going basis -- we've come up 70, which you can track in the table below.
What are the defining characteristics of these great growth stocks? Size is certainly part of it, and almost all of the stocks on the core list have market capitalizations and total revenues that top $5 billion a year.
We also looked for companies with diverse product lines and dominant positions in their industries.
As for growth, we sought companies that are capable of returning a steady 11 percent to 12 percent a year through a combination of earnings gains and yield.
Company
(Ticker symbol) |
Current
price |
52-wk
high |
52-wk
low |
P/E
(TTM) |
Proj. 5-yr
growth |
PEG
ratio |
Comments |
| 3M (MMM) |
$80.47 |
$85.47 |
$69.71 |
19 |
11.5% |
1.9 |
The maker of Scotch Tape and Post-its needs to boost sales growth across its diverse product lines. |
| Abbott Laboratories (ABT) |
$41.25 |
$50.00 |
$37.50 |
19 |
12.0% |
1.5 |
Diverse health-care products and a promising pipeline of new drugs |
| Aetna (AET) |
$45.47 |
$52.48 |
$33.70 |
16 |
15.0% |
0.4 |
Health insurer recovering from business lost because of corporate layoffs |
| Aflac (AFL) |
$45.07 |
$49.65 |
$35.50 |
15 |
15.0% |
1.3 |
Life insurer suffering from recession-induced sluggishness in sales |
| Alcoa (AA) |
$34.09 |
$33.03 |
$22.28 |
24 |
12.0% |
1.7 |
Biggest U.S. aluminum producer, with growth-stock earnings potential |
| American Express (AXP) |
$51.13 |
$55.00 |
$43.34 |
19 |
13.3% |
1.4 |
Record billings and membership growth hinge on consumer spending |
| Amgen (AMGN) |
$69.93 |
$86.92 |
$57.01 |
23 |
20.0% |
1.5 |
Former biotech diversifying beyond two blockbuster products |
| Anadarko Petroleum (APC) |
$105.80 |
$110.15 |
$67.71 |
10 |
9.0% |
1.9 |
Leading exploration and production company for natural gas |
| Anheuser-Busch (BUD) |
$42.40 |
$48.49 |
$40.15 |
18 |
11.0% |
1.4 |
World's largest brewer produces half of the beer consumed in the U.S. |
| Applied Materials (AMAT) |
$17.42 |
$21.06 |
$14.33 |
26 |
17.5% |
1.2 |
The biggest semiconductor-equipment maker is volatile but may be seeing an upturn in new orders. |
| Bank of America (BAC) |
$45.46 |
$47.44 |
$40.93 |
11 |
10.0% |
1.2 |
Acquisition of FleetBoston helps consumer business, and stock is cheap |
| Best Buy (BBY) |
$56.44 |
$59.50 |
$31.93 |
24 |
15.0% |
1.3 |
Consumer-electronics retailer to profit from new digital technology |
| Boeing (BA) |
$80.29 |
$80.92 |
$56.22 |
25 |
12.0% |
2.8 |
Largest U.S. maker of commercial airplanes is benefiting from industry upturn |
| Boston Scientific (BSX) |
$21.31 |
$31.32 |
$20.57 |
28 |
20.0% |
0.6 |
Maker of less-invasive medical devices for heart and digestive tract |
| Burlington Northern (BNI) |
$82.44 |
$87.46 |
$45.98 |
20 |
10.0% |
3.2 |
One of the largest and best-managed U.S. railroads has been benefiting from stronger demand. |
| CVS Corp (CVS) |
$30.30 |
$31.89 |
$23.89 |
20 |
13.0% |
1.1 |
Improving growth prospects could boost P/E for largest drug retailer |
| Cisco Systems (CSCO) |
$20.99 |
$22.00 |
$16.83 |
24 |
15.0% |
1.6 |
Leading maker of routers for the Internet is posting very strong sales |
| Citigroup (C) |
$47.43 |
$49.76 |
$42.91 |
12 |
12.0% |
1.0 |
Largest and best-diversified U.S. financial services company |
| Clear Channel Comm (CCU) |
$28.47 |
$34.61 |
$27.82 |
24 |
17.0% |
1.2 |
Leading radio-station operator still awaiting advertising upturn |
| Coca-Cola (KO) |
$41.22 |
$45.26 |
$39.36 |
20 |
10.0% |
2.0 |
Still one of the best brands in the world, but soda sales have been lackluster in the U.S. and Europe. |
| Colgate-Palmolive (CL) |
$56.88 |
$58.44 |
$48.25 |
23 |
11.0% |
2.0 |
Maker of toothpaste, soap and laundry detergent cheaper than P&G |
| Comcast (CMCSA) |
$27.48 |
$33.81 |
$25.35 |
65 |
15.0% |
4.8 |
New services will drive growth for No. 1 cable company |
| ConocoPhillips (COP) |
$67.37 |
$71.48 |
$47.55 |
7 |
6.5% |
1.1 |
No. 3 U.S. oil company is an inflation hedge and is adding to its oil & gas reserves at a very high rate. |
| Danaher Corp (DHR) |
$65.28 |
$66.35 |
$48.32 |
23 |
15.0% |
2.0 |
Valuation for well-managed conglomerate is depressed despite strong growth |
| Dell (DELL) |
$29.51 |
$41.99 |
$28.60 |
20 |
17.0% |
1.4 |
PC sales have been weak, but Dell is benefiting from sales of servers and from overseas business. |
| Disney (DIS) |
$27.67 |
$28.85 |
$22.89 |
21 |
15.0% |
1.7 |
Valuable entertainment assets weighed down by management infighting |
| DuPont (DD) |
$42.97 |
$50.83 |
$37.60 |
20 |
9.5% |
1.9 |
Largest U.S. chemical company offering above-average dividend yield |
| ExxonMobil (XOM) |
$62.05 |
$65.96 |
$52.78 |
10 |
8.5% |
2.2 |
The largest U.S. oil company can help protect your portfolio against rising energy costs and inflation. |
| FedEx (FDX) |
$115.89 |
$119.25 |
$76.81 |
21 |
15.0% |
1.7 |
Booming air express service is making up for any weakness in ground shipping or at Kinko's. |
| First Data (FDC) |
$47.58 |
$48.77 |
$36.50 |
23 |
15.0% |
1.5 |
Provider of services for money-transfer and credit-card transactions |
| Fortune Brands (FO) |
$78.14 |
$90.48 |
$73.50 |
20 |
12.0% |
1.4 |
A superb set of consumer brands, including Jim Beam bourbon, Moen faucets and Titleist golf balls. |
| Gannett (GCI) |
$58.60 |
$80.02 |
$58.07 |
11 |
9.8% |
1.2 |
Publisher of USA Today and 100 other newspapers tracks advertising |
| Genentech (DNA) |
$80.98 |
$100.20 |
$55.79 |
68 |
29.0% |
3.4 |
Original biotech company now boasts 11 successful products |
| General Dynamics (GD) |
$64.68 |
$65.95 |
$50.36 |
17 |
12.0% |
0.9 |
Higher defense spending should help General Dynamics, which makes tanks and troop carriers. |
| General Electric (GE) |
$33.96 |
$37.34 |
$32.21 |
19 |
10.0% |
2.1 |
Earnings growth has slowed at America's top conglomerate but should pick up over the coming year. |
| Harley-Davidson (HDI) |
$52.29 |
$59.14 |
$44.40 |
15 |
15.0% |
1.2 |
Leading U.S. maker of motorcycles with fantastically loyal customers |
| Hershey Foods (HSY) |
$50.11 |
$67.37 |
$50.03 |
25 |
10.0% |
2.5 |
Brand extensions and cost cutting wring higher profits from chocolate |
| Home Depot (HD) |
$41.37 |
$43.98 |
$34.56 |
15 |
13.0% |
1.4 |
Do-it-yourselfers encouraged by strong housing sales |
| IBM (IBM) |
$81.09 |
$89.94 |
$71.85 |
16 |
10.0% |
1.6 |
Diverse computer giant looks for upturn in corporate IT spending |
| Illinois Tool Works (ITW) |
$95.04 |
$98.75 |
$78.50 |
18 |
13.5% |
1.6 |
Maker of fasteners and construction items benefiting from recovery |
| Intel (INTC) |
$19.15 |
$28.84 |
$19.24 |
13 |
15.0% |
1.2 |
The leading semiconductor maker is investing heavily in new chips to outpace its rival AMD. |
| InterActiveCorp (IACI) |
$29.71 |
$31.50 |
$23.25 |
17 |
20.0% |
1.7 |
Barry Diller's collection of Internet businesses that turn in consistent profits |
| J.P. Morgan Chase (JPM) |
$41.52 |
$42.66 |
$32.92 |
17 |
10.0% |
1.3 |
Second-largest U.S. bank now that Bank One merger has been completed |
| Johnson & Johnson (JNJ) |
$57.51 |
$69.99 |
$56.65 |
16 |
12.9% |
1.5 |
The best-diversified health-care company needs new products to replace those coming off patent. |
| Johnson Controls (JCI) |
$75.50 |
$77.92 |
$52.57 |
19 |
13.5% |
1.3 |
Control systems and auto parts largely reflect state of auto business |
| Lilly (LLY) |
$53.01 |
$60.98 |
$49.47 |
28 |
14.1% |
1.3 |
Top drugmaker is ready to launch several promising new products |
| Limited Brands (LTD) |
$24.07 |
$25.50 |
$18.81 |
14 |
15.0% |
1.2 |
Retailer owns chains such as Victoria's Secret and Bath & Body Works |
| Lowe's (LOW) |
$64.50 |
$69.70 |
$50.72 |
18 |
17.5% |
1.4 |
Smaller, cheaper rival of Home Depot looks to state of housing market |
| Merrill Lynch (MER) |
$77.33 |
$80.53 |
$52.00 |
14 |
12.0% |
1.5 |
Leading full-service brokerage is benefiting from market upturn |
| Microsoft (MSFT) |
$27.12 |
$28.38 |
$24.25 |
22 |
11.8% |
1.9 |
Still the premier software company for PCs, with $50 billion in cash |
| Nike B (NKE) |
$82.36 |
$91.54 |
$75.10 |
15 |
13.4% |
1.5 |
World's largest footwear maker feels the swoosh of recovery |
| Northrop Grumman (NOC) |
$68.81 |
$70.04 |
$52.17 |
18 |
12.0% |
1.9 |
Higher defense spending should help Northrop, which makes aircraft carriers, ships and subs. |
| Omnicom Group (OMC) |
$84.98 |
$88.80 |
$75.75 |
19 |
11.3% |
2.0 |
World's largest ad company posts earnings gains on better ad market |
| PepsiCo (PEP) |
$57.80 |
$60.55 |
$52.07 |
24 |
11.5% |
2.2 |
Smart diversification away from cola and into snack foods has enabled PepsiCo to outperform Coke. |
| Pfizer (PFE) |
$24.28 |
$29.21 |
$20.27 |
22 |
12.3% |
0.9 |
The world's largest pharmaceutical company needs new products to replace those coming off patent. |
| Procter & Gamble (PG) |
$56.19 |
$62.50 |
$51.91 |
20 |
11.0% |
2.0 |
Superb collection of widely recognized consumer brands |
| Schlumberger (SLB) |
$62.98 |
$66.95 |
$32.31 |
34 |
18.0% |
1.7 |
Oil service company especially sensitive to new oil exploration |
| Staples (SPLS) |
$25.17 |
$26.61 |
$18.64 |
22 |
15.5% |
1.2 |
This leading chain of office-supply superstores has long been cranking out steady earnings gains. |
| Sysco (SYY) |
$31.47 |
$38.04 |
$29.11 |
22 |
15.0% |
1.4 |
Largest U.S. distributor of food to restaurants and institutions |
| Target (TGT) |
$51.19 |
$60.00 |
$45.55 |
18 |
15.0% |
1.5 |
The upscale discounter's sales are running a bit below expectations |
| Texas Instruments (TXN) |
$32.85 |
$34.95 |
$22.51 |
23 |
20.0% |
1.7 |
Top maker of digital signal processors used in communications |
| Time Warner (TWX) |
$16.85 |
$19.00 |
$16.10 |
27 |
13.8% |
1.9 |
A collection of undervalued media assets that needs to start showing some earnings momentum. |
| Tyco International (TYC) |
$25.72 |
$34.48 |
$24.65 |
16 |
14.0% |
1.1 |
Plans to realize hidden value by breaking up the company haven't offset Tyco's soft earnings outlook. |
| United Technologies (UTX) |
$57.24 |
$59.94 |
$48.43 |
18 |
10.0% |
1.0 |
Conglomerate looking for upturn in its aerospace markets |
| UnitedHealth Group (UNH) |
$51.49 |
$64.61 |
$44.30 |
20 |
17.0% |
0.8 |
Health insurer's acquisition of Mid-Atlantic allows for cost cutting |
| Viacom B (VIA.B) |
$38.31 |
$44.90 |
$37.67 |
N/A |
N/A% |
N/A |
Viacom's decision to split the company in two could eventually realize hidden value, but hasn't yet. |
| Wal-Mart Stores (WMT) |
$45.40 |
$50.87 |
$42.31 |
16 |
14.0% |
1.4 |
Despite labor troubles, Wal-Mart can maintain profitability by adjusting its product mix and expanding. |
| Walgreen (WAG) |
$42.95 |
$49.01 |
$40.98 |
27 |
15.0% |
2.2 |
leading drugstore chain posting exceptional gains in same-store sales |
| Washington Mutual (WM) |
$44.09 |
$45.60 |
$36.64 |
11 |
9.0% |
1.5 |
Seattle-based lender hurt by slowdown in mortgage refinancing |
| Wyeth (WYE) |
$46.81 |
$50.49 |
$40.90 |
17 |
9.0% |
2.0 |
Strong pharmaceutical pipeline still eclipsed by liabilities from diet drugs |
