Message-ID: <26729164.1075855636360.JavaMail.evans@thyme> Date: Fri, 1 Dec 2000 09:32:00 -0800 (PST) From: sivy@listserv.pathfinder.com To: sivy@listserv.pathfinder.com Subject: Sivy on Stocks: Updating the Sivy 100 Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit X-From: Sivy On Stocks X-To: SIVY@LISTSERV.PATHFINDER.COM X-cc: X-bcc: X-Folder: \Peter_Keavey_Dec2000\Notes Folders\Discussion threads X-Origin: Keavey-P X-FileName: pkeavey.nsf ********************[ A D V E R T I S E M E N T ]**************** Turn your Nasdaq trash into cash! Dive into the Nasdaq dumpster and capture 50-100% profits in just a few days. Don't get left behind! Click here for your FREE special report: "The Next 5 Monster Stocks of the NewTech Era" http://www.changewave.com/a/11/sos27 ***************************************************************** SIVY ON STOCKS from money.com December 1, 2000 Updating the Sivy 100 Out goes Allstate, AMR, Bank One and Honeywell. The new members are Comcast, EDS, MBNA and Motorola. By Michael Sivy I like to update the Sivy 100 [ www.money.com/money/sivy100/ ] at regular intervals, and given the market turmoil of recent months, some changes are surely in order. That said, readers shouldn't rush to buy new additions, nor should they necessarily sell the stocks I'm replacing. The Sivy 100 is intended to be a source for top-quality growth stocks that belong in a well-balanced stock portfolio. But the decision to buy or sell should also reflect price levels and the near-term market outlook. Far and away the most important recent development for the overall market is that analysts have become increasingly worried about the potential for a serious economic slowdown next year -- conceivably even a recession. As a result, earnings growth projections have come down across the board and otherwise solid companies in slower-growing industries have slipped below my 12 percent cutoff for projected total return. In a sense, the downward revisions by analysts are meaningless. The folks in Bally tasseled loafers didn't cut their numbers until after many companies had already warned that future earnings would fall short. So why didn't they tell us that six months ago? Moreover, the long-term earnings growth potential for some stocks has arguably gone up slightly, since future profits will be compared with weak numbers for the current year. As a result, I haven't kicked stocks off the list simply because analysts have temporarily cut their projections to a little below 12 percent. The ones I've replaced no longer have the long-term growth prospects I look for. Allstate [ALL], for example, is cutting costs and broadening its business in positive ways. But its growth prospects have fallen far below my cutoff, largely because of weakness in insurance pricing and losses due to unusually bad weather. (Though its growth prospects are sub-par, many analysts still like Allstate as a value play with a price-to-earnings ratio of14.) AMR [AMR], the parent of American Airlines, faces an uncertain future. The March spin-off of its SABRE reservation system muddies year-over-year comparisons. High jet-fuel prices and the possibility of a recession-induced drop in business traffic further cloud prospects. Bank One [ONE] is suffering in a more difficult banking environment and needs to complete a complicated restructuring and cost-reduction plan. As a result, the company's growth prospects don't look as attractive as those of some competitors. Finally, Honeywell International [HON] will almost certainly be taken over by General Electric within the next few months, so it will disappear from our list in any event before too long. I try to make sure that the Sivy 100 includes as diversified an assortment of industries as possible. But obviously, some industries have better long-term growth prospects than others. So as projections become less generous overall, there's a natural shift away from old-line businesses to higher-growth stocks. Since I've written a lot about Comcast [CMCSK] and Motorola [MOT], they're natural additions to the list. Among other stocks that passed our latest screens, Electronic Data Systems [EDS] is the most attractive, with projected growth of 15 percent a year and 21 P/E. And MBNA [KRB], a major credit-card issuer, looks like a sound choice to replace Bank One. ================ UPCOMING CHAT: Monday, December 4 at 8pm ET, 5pm PT Michael Sivy identifies sectors and stocks that possess true value in a rocky market. http://www.money.com/chat/ AOL users go to Keyword: Live ================ ### Post your comments on Michael's column at: http://www.money.com/depts/investing/sivy/index.html To subscribe or unsubscribe to Sivy on Stocks, go to: http://www.money.com/email/ Earning Releases and Calls For the latest corporate earnings releases and online conference calls click on: http://money.ccbn.com * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * Special Internet Offer!!! 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