Lehman's Uncommon Values Veer Away From Tech
Unlike last year, the pickings are slim in tech on
Lehman Brothers'
latest "10 Uncommon Values," the queen of all top-10 stock lists.
Instead, some of the best-known names on this year's list include a giant bank and a waste company. The ranking, which has been around since 1949, is compiled from a selection of about 90 stocks that Lehman's analysts think have the best chance of outperforming the
S&P 500 over the next 12 months.
Since its inception, Uncommon Values has outperformed the broader market more than 73% of the time, returning average annual returns of 15.3% vs. the S&P 500's 8.9%.
But last year's tech-heavy list, which included
Juniper Networks
(JNPR) - Get Report
and telecom equipment maker
Nortel Networks
(NT)
, is now underwater. On average, the stocks lost 43.4% over a 12-month period, compared with a 46.2% drop in the
Nasdaq Composite Index and a 16.5% fall in the S&P 500.
This year, said Peter Cardillo, chief strategist at
Westphalia Investments
, "They're certainly looking at a more diversified group, and these are basically good value stocks."
All but one of the stocks on last year's list --
Cendent
(CD)
-- had sharp losses during their year on the list.
"These are all different companies and different industries that we think, for various company-specific reasons, are good candidates for delivering decent investment performance over the next 12 months," Jeff Applegate, the firm's chief investment strategist, said of this year's choices. "The list was concentrated in tech last year, but it was also not a reflection of our strategy or a macro call. It just happened to turn out that way. The process, as far as we know, has always been one of bottom-up stock selection, not top down."
"They're taking a cautious approach," Cardillo said. "They believe the market is going higher, but also that larger-cap, grade-A companies will move faster than speculative ones."
Lehman's 10 Uncommon Values:
Alcoa
Bed Bath and Beyond
Cisco Systems
Comcast
Concord EFS
Harley-Davidson
Liberty Media
Mirant
Washington Mutual
Waste Management