The maddening uncertainty of war has made it all but impossible to separate the genuinely good stocks from the genuinely bad ones lately. Money managers in a new survey suggested staying with sector leaders and favored health care as the area most likely to outperform.

While few stocks seem to have worked for investors in the current environment, the study by strategic consultants Brendan Wood International found that institutional players still have lots of faith in names like


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Teva Pharmaceutical

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WellPoint Health




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In fact, large investors believe these six companies are among the best in the world for their solid leadership, strong competitive positions and good long-term growth prospects, among other things.

True Belief

"What's interesting is the level of long-term confidence in investment targets that the leading companies have," said Brendan Wood, the firm's chairman. "These companies are perceived to have tremendous onward, upward potential."

Wood ranked more than 500 of the world's largest firms based on the responses of 2,200 global analysts and institutional investors, who were asked a series of questions about why they bought, sold or changed their recommendations.

Specifically, investors were asked to rate companies based on the quality of their management, their financial position and outlook, their competitive advantages, their acquisition potential and how well they manage shareholder expectations. The survey is ongoing and will be updated on a quarterly basis.

Anthem, which achieved the highest shareholder confidence score overall, was specifically praised for its attempt to grow margins. "By lobbying to force drug costs downward, they are directly decreasing their costs by indirect means," said one respondent.

As for No. 2-ranked Teva, investors said the firm has "a tremendous pipeline of generic drugs and others under patent," and that it is "a very innovative company ... on the verge of growing by leaps and bounds."

Still, shareholders also suggested that the company "needs more external board members" and should "change

its focus from earnings-per-share to cash flow."

Springs Eternal

Despite its lofty price-to-earnings multiple, investors also commended eBay for its good growth potential, solid management, clear business model and straightforward communication.

Among sectors, the health care group ranked No. 1 in the survey alongside the household products group. Hardware, telecom equipment and banks, meanwhile, came in last.

Investor confidence in





( NT) and


( LU) is especially low, with shareholders criticizing everything from these firms' CEOs to their valuations and growth projections. Qwest was the lowest-ranked U.S. company in the survey, with particularly low marks being given for the firm's management of shareholder expectations and its short-term outlook.

As for Nortel, Stewart Borden, a partner at Brendan Wood, said several investors believe that the firm's new management is starting to restructure by lowering costs and improving efficiencies. But he said most investors feel that the company "has a long way to go to gain the market's trust again."

"Investors cite a need

for the firm to repair its credit

and sell off assets," he said, adding that they also remain skeptical about management and are concerned about the firm's poor communication and disclosure of information.

Borden said shareholders are also worried about Lucent's credit position and are concerned that revenue will decline further. "Investors cited credit concerns, deteriorating balance sheet, market conditions and sales problems," Borden said. Still, he said, some investors are hopeful that new restructuring plans are starting to work, that partnerships are showing results and the company is resourceful and aggressive.

Other companies that fared poorly in the study were


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Merrill Lynch

( MER).

Brendan Wood said the findings are significant because professional investors "are generally ahead of the curve."

"They feel they have unique knowledge and insight and perspective. They're less reactionary and they're less affected by the media than one would think," he said.

Since the start of the year, Anthem and Teva are down about 6% while Kohl's is down 4.5% and WellPoint has fallen 5%. Still, Starbucks has risen 11% and eBay has climbed 17%. Meanwhile, Lucent and Nortel are up 23% and 29%, respectively. Qwest has plunged 33%.

Of the 10 companies with the highest shareholder confidence, six were U.S. firms. But that strong performance is somewhat misleading because the survey examined only the largest companies in the world based on market capitalization, so over 40% of those included were American. Even so, Borden said, U.S. companies generally ranked higher than European and Japanese firms.