I'm also dropping Ciena ( CIEN) because the optical market has moved away from Ciena's strengths, and the company has been slow to respond to the move with new dominant products. It has lost ground to competitors such as Lucent Technologies ( LU) and Nortel ( NT).

Finally, I'm dropping RealNetworks ( RNWK) because the company is increasingly being forced to compete in its core market on content, and that's an extremely tough and competitive battleground that doesn't play to RealNetworks' strengths.

On the Buy List

With these seven changes -- a portfolio turnover rate of 14% this year -- I've set the Future 50 list for another year. By the rules of this portfolio, these names won't change, barring bankruptcy or some equally disastrous event, until the revision of July 2005.

What will change from quarter to quarter (and perhaps even month to month if market conditions justify it) are the "buy" ratings that I put on the individual stocks of the Future 50 (and the 50 Best, too, as you'll note in the updates to this column) when I think the share price makes a stock particularly attractive for long-term investors looking to build positions at reasonable prices. (The removal of a "buy" doesn't signal a "sell," but rather, my opinion that the stock has appreciated to something like fair value, and the price doesn't justify buying more shares at the moment. Wait for a better opportunity.)

My six current "buy" recommendations for the Future 50 are Affymetrix ( AFFX), Analog Devices ( ADI), ChoicePoint, FuelCell Energy, Performance Food Group ( PFGC) and Taiwan Semiconductor.

Expect my annual update of the 50 Best Stocks in the World portfolio in mid-September.

New Developments on Past Columns

I'm putting "buy" recommendations on eight stocks listed in the 50 Best Stocks in the World portfolio, as well. Current buys are Charles Schwab ( SCH), Cisco Systems ( CSCO), First Data ( FDC), Intel ( INTC), Microsoft ( MSFT), PepsiCo ( PEP), Southwest Airlines ( LUV) and Texas Instruments ( TXN). I'm dropping the former "buys" on BP ( BP) and ExxonMobil ( XOM) because the shares have appreciated so much that they're no longer at an attractive price for building positions.


Please note that due to factors including low market capitalization and/or insufficient public float, we consider FuelCell Energy, World Fuel Services, Netegrity and Atlantic Coast Airlines to be small-cap stocks. You should be aware that such stocks are subject to more risk than stocks of larger companies, including greater volatility, lower liquidity and less publicly available information, and that postings such as this one can have an effect on their stock prices.
At the time of publication, Jim Jubak owned or controlled shares in none of the equities mentioned in this column. He does not own short positions in any stock mentioned in this column. Email Jubak at jjmail@microsoft.com.

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