THE OUTLOOK
INTELLIGENCE FOR THE INDIVIDUAL INVESTOR
March 16, 2015
Volume 87
Number 10
Local Is Global
Increased foreign sales for many “500” companies last year
More S&P 500 companies increased than
decreased foreign sales in 2014, according
to initial calculations by Howard Silverblatt,
senior index analyst for S&P Dow Jones
Indices. The higher foreign sales reflect the
improving global economy.
“An initial look at full 2014 S&P 500 foreign
sales shows 51.5% of the issues increased
their percentage of foreign sales, with 43.6%
decreasing,” Silverblatt says. The three biggest increasers, according to Silverblatt’s
calculations, were Under Armour, Vertex
Pharmaceuticals, and Ameriprise Financial.
(See table.)
In 2013, 46.29% of all sales for S&P 500
companies were produced and sold outside
of the U.S., up from 31.7% in 2000.
Also in 2013, Asia represented 7.71% of
sales, while Europe represented 6.80%. That
was the first year Asia outpaced Europe, in
What’s Inside
part due to the rise of the middle class in
Asia and in part due to European economic
woes.
However, European officials are now taking
steps to improve the economic outlook. At
the European Central Bank's (ECB's) monetary policy meeting on March 5, President
Mario Draghi stated that the previously
announced €60 billion per month quantitative easing program would begin on March
9 with the purchase of both public- and
private-sector securities.
In addition, the ECB upped its growth
outlook for 2015 to 1.5% from 1.0% and
reduced inflation expectations to 0% in 2015
from 0.7%. 
—Beth Piskora
Senior Content Director
S&P Capital IQ
BIGGEST FOREIGN SALES GAINERS
Intelligencer
2
ETF Strategies
3
Sub-Industry Outlook
4
Focus Stock
5
Master List
6
Platinum Portfolio
7
Observatory
8
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Please see page 8 for required research
analyst certification disclosures.
COMPANY NAME / SYMBOL
Under Armour / UA
Vertex Pharm. / VRTX
Ameriprise Financial / AMP
Franklin Resources / BEN
Northrop Grumman / NOC
General Dynamics / GD
Eli Lilly / LLY
Health Care REIT / HCN
Quanta Services / PWR
Weyerhaeuser / WY
STARS
CURRENT
PRICE ($)
12-MONTH
TARGET
PRICE ($)
3
4
3
4
2
3
3
3
5
3
76.11
122.58
132.82
52.16
157.85
132.51
69.49
74.86
27.72
33.14
75
140
130
58
137
145
74
85
41
37
Source: S&P Capital IQ, S&P Dow Jones Indices.
SECTOR
Consumer Disc.
Health Care
Financials
Financials
Industrials
Industrials
Health Care
Financials
Industrials
Financials
2013 (%) 2014 (%)
5.93
25.99
8.00
32.50
10.14
20.41
44.23
13.63
20.08
29.23
9.34
37.79
11.00
40.95
12.55
24.73
53.43
16.35
24.07
33.96
% CHG
57.43
45.39
37.61
25.99
23.80
21.14
20.80
19.96
19.86
16.18
2 S&P CAPITAL IQ THE OUTLOOK MARCH 16, 2015
www.spoutlook.com
Intelligencer
S&P Capital IQ’s The Outlook
GLOBAL MARKETS INTELLIGENCE
Content Director Beth Piskora
Contributing Editors John Hackett, Robin Mordfin
Headlines, Highlights, and What’s on our Minds
RESEARCH & ANALYTICS
Director, Global Equity Research
Kenneth Leon
Managing Director, U.S. Equity Strategy
Sam Stovall
PORTFOLIO CHANGES: NRG Energy (NRG 23.28 ) replaced Office Depot
(ODP 9.31 ) in the Platinum portfolio effective March 9. In the High-Quality
Capital Appreciation portfolio, International Business Machines (IBM 157.98
) replaces Qualcomm (QCOM 69.37 ) effective March 16.
BIG DIVIDENDS: Seven major financial services companies announced dividend
increases on March 11, enabling the financial services sector to retake the lead
as the No. 1 dividend-paying sector in the S&P 500, overtaking the information
technology sector. The financial services sector now accounts for 15.13% of
the dividends paid out by S&P 500 companies, while information technology
accounts for 14.80%. (Previously, information technology had been 14.89%,
while financial services was 14.64%.) The seven companies are: American
Express (AXP 81.56 ), Citigroup (C 54.08 ), Goldman Sachs (GS
189.95 ), JPMorgan Chase (JPM 61.37 ), Morgan Stanley (MS 37.10
), U.S. Bancorp (USB 44.47 ), and Wells Fargo (WFC 55.59 ).
For customer service, please call 1-800-5234534 and choose option 1 and then option 2
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Copyright ©2015. All rights reserved. “Standard &
Poor’s,” “S&P,” “S&P 500,” “S&P MidCap 400,” and
“S&P SmallCap 600” are registered trademarks
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is not responsible for any errors or omissions
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information.
GM PLANS $5 BILLION IN STOCK REPURCHASES: “We expect the plans by General
Motors (GM 38.43 ) to repurchase $5 billion in stock through 2016 —
along with steadily increasing cash dividends — to be funded by strong performance in the U.S. and China, as well as improvement in Europe,” says S&P
Capital IQ Equity Analyst Efraim Levy. Though S&P Capital IQ notes challenges to
the automobile company’s business in Russia, “we see upside potential to these
repurchases on the backs of new products to be released this year in different
regions, as well as acceleration of the product refresh cycle, a key factor in industry competitiveness,” says Levy.
SMOOTH CFO TRANSITION SEEN FOR GOOGLE: S&P Capital IQ is maintaining its
strong buy opinion on Google (GOOGL 561.17 ) following last week’s announcement that CFO Patrick Pichette plans
to retire after nearly seven years at the firm. “Mr. Pichette is a strong member of the Google executive team, and we note his
financial spending discipline, along with a willingness to take risks,” says S&P Capital IQ Equity Analyst Scott Kessler. “However, we do not see any issues with Google finding a suitable replacement, and we anticipate a smooth transition.” Google
says it expects the search to take about six months, and Mr. Pichette is seen assisting in the process. “We believe the shares
are attractive and maintain our 12-month target price at $635,” says Kessler.
INTEL A ‘BUY’ DESPITE LOWER REVENUE FORECAST: Intel (INTC 30.80 ) cut its first quarter revenue projection to
approximately $12.8 billion, down from its prior outlook of $13.7 billion. The company attributed the lower forecast to weaker
PC demand related to softer business in desktop sales. “We note, though, that Intel’s outlook for the data center business
remains unchanged, as does its 60% gross margin view,” says S&P Capital IQ Equity Analyst Angelo Zino. “Despite the lower
guidance, we think the PC supply chain will be better positioned and leaner exiting the quarter, and we see a more stable
landscape as the year progresses,” he adds. 
S&P CAPITAL IQ EVALUATION SYMBOLS
STARS Rankings

Our evaluation of the 12-month potential of stocks is indicated
by STARS:
 Strong Buy—Total return is expected to outperform
the total return of a relevant benchmark by a wide
margin over the coming 12 months, with shares rising in price on an absolute basis.
  Buy—Total return is expected to outperform the
total return of a relevant benchmark over the
coming 12 months, with shares rising in price on an
absolute basis.
  Hold—Total return is expected to closely approximate
the total return of a relevant benchmark over the

coming 12 months, with shares generally rising in
price on an absolute basis.
 Sell—Total return is expected to underperform the
total return of a relevant benchmark over the coming
12 months, and the share price is not anticipated to
show a gain.
 Strong Sell—Total return is expected to underperform the total return of a relevant benchmark by a
wide margin over the coming 12 months, with shares
falling in price on an absolute basis.
NR Not ranked.
Quality & Fair Value Rankings
Our appraisals of the growth and stability of earnings and dividends
over the past 10 years for STARS and other companies are indicated by Quality Rankings:
For important legal disclosures, go to www.capitaliq.com/home/legal-disclaimers/sp-capital-iq-research-reports.
A+
A
A-
Highest
High
Above Avg.
B+ Average
B Below Avg.
B- Lower
C Lowest
D In reorganization
NR Not Ranked
Quality Rankings are not intended to predict stock price movements.
S&P Fair Value Rank: Using S&P’s exclusive proprietary quantitative model, stocks are ranked in one of ﬁve groups, ranging from
Group 5, listing the most undervalued stocks, to Group 1, the most
overvalued issues. Group 5 stocks are expected to generally outperform all others. The Fair Value rankings imply the following:
5-Stock is signiﬁcantly undervalued; 4-Stock is moderately
undervalued; 3-Stock is fairly valued; 2-Stock is modestly overvalued; 1-Stock is signiﬁcantly overvalued. As an input to the S&P
Mutual Fund Ranking, S&P evaluates the weighted average Fair
Value Rank of the underlying holdings of the mutual fund compared with its category.
www.spoutlook.com
S&P CAPITAL IQ THE OUTLOOK MARCH 16, 2015
3
ETF
STRATEGIES
Todd Rosenbluth
S&P Capital IQ
Director of ETF
Research
Fast Starters Among Young ETFs
Recently launched funds are best dividend performers thus far in 2015
In the last three years, ETF providers have launched 20 U.S. dividend
ETFs, doubling the number of
offerings. Considering the expectation that the Federal Reserve
will raise interest rates during
2015, limiting the appeal of these
“bond proxies,” it is easy to say
investors don’t need these newer
alternatives. However, when we
look at which dividend ETFs have
performed the best to start 2015,
these “young” ETFs top the list.
The strongest performing U.S.
dividend ETF this year, up 3.1%,
has been Deep Value ETF, a fund
that few investors have likely heard
of. The ETF, which launched only
last September, has $224 million
in assets and is ranked by S&P
Capital IQ. The 0.80% expense
ratio, which is high for an ETF, contributes negatively to our ranking.
Meanwhile, though, positive S&P
Capital IQ STARS and Technical
inputs are favorable. The average
expense ratio for an equity income
mutual fund is 1.3%.
The Deep Value ETF is composed
of 20 dividend paying stocks within
the S&P 500 Index that the ETF
provider TWM believes have solid
balance sheets, positive earnings,
and strong free cash flow. The
companies within the Index are
weighted based on a rules-based
assessment of their valuations so
that the stocks that are deemed
most attractively valued receive a
higher weight.
Those holdings include Computer Sciences (CSC 67 ),
Frontier Communications (FTR
7 ), and Hewlett-Packard
(HPQ 32 ). From a sector
perspective, consumer discretionary (26% of assets) and telecom
services (23%) make up half of the
portfolio. There is no exposure to
financials and materials and only
minimal exposure to consumer
staples companies.
Another strong performing U.S.
dividend ETF is Cambria Shareholder Yield.
The ETF launched in May 2013
and has $222 million in assets.
Cambria is an actively managed
ETF that employs a quantitative
approach to select U.S. listed companies that show strong characteristics in returning free cash flow
to their shareholders. Specifically,
Cambria invests in 100 stocks with
market caps greater than $200
million that rank among the highest in paying cash dividends, that
also engage in net share repurchases, and that pay down debt on
their balance sheets.
Those holdings include Lowe’s
(LOW 74 ), Southwest Airlines
(LUV 45 ), and Western
Digital (WDC 96 ). From a
sector perspective, the ETF is
more diversified than Deep Value.
However, financials (22% of
assets), consumer discretionary
(17%), and information technology
(16%) companies are the most
represented.
Cambria has a more modest
0.59% expense ratio relative to
Deep Value’s 0.80%, but still much
higher than most dividend ETFs.
However, the 2.3% return year to
date has been stronger than other
more popular ETFs, suggesting
that it might be equally worthy of
investor consideration.
Other dividend ETFs that have
less than three years of history but
have started 2015 on a high note
include First Trust NASDAQ Rising Dividend Achiever, FlexShares
Quality Dividend, and WisdomTree
US Dividend Growth. All three have
outperformed the S&P 500 Index
this year.
Of course, past performance
is not necessarily indicative of
future results, and S&P Capital IQ
cautions investors against making
investment decisions solely based
on an ETF’s record. 
QUICK OFF MARK IN 2015
TOTAL RETURN (%)
FUND NAME / SYMBOL
RANK
CURRENT
PRICE ($)
YIELD
(%)
1-YEAR
3-YEAR*
5-YEAR*
EXPENSE
RATIO (%)
ASSETS
($ MLNS)
Deep Value ETF / DVP
Cambria Shareholder Yield / SYLD
First Trust NASDAQ Rising Div. Achiever / RDVY
FlexShares Quality Dividend / QDF
WisdomTree US Div. Growth / DGRW
MW
MW
OW
MW
OW
25.70
31.58
21.97
36.37
31.00
NA
1.70
1.84
2.62
1.77
NA
9.52
10.63
11.24
13.92
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
0.80
0.59
0.50
0.39
0.28
224
222
7
707
417
Source: S&P Capital IQ. OW-Overweight. MW-Marketweight. *Average annualized.
4 S&P CAPITAL IQ THE OUTLOOK MARCH 16, 2015
www.spoutlook.com
SUBINDUSTRY
OUTLOOK
Ken Leon
S&P Capital IQ
Equity Analyst
Communications Equipment
Outlook: Positive
S&P Capital IQ’s fundamental
outlook for the communications
equipment sub-industry for 2015
is positive.
The continued rapid consumption of network capacity, buoyed
by the proliferation of tablets and
smartphones, is a solid long-term
growth driver for the industry,
and we see an improving operating outlook in 2015. We think the
domestic macroeconomic situation
is improving and that the European
economy is beginning to recover.
We believe telecom equipment
purchases will begin to pick up in
2015 as carriers and enterprises
shift from legacy networks to
modern architectures.
While near-term industry spending may be choppy with industry
consolidation, we see strong
positive secular demand trends
toward cloud computing, wireless,
visualization, and data center
transformation.
In the service provider segment,
near-term equipment sales, particularly for optical components, are
beginning to improve. While carriers
have been cautious over the past
several years due to the economy,
we think spending will increase in
2015 as new technologies such as
Long Term Evolution (LTE) in the
wireless space, DOCSIS3.0 in the
cable space, and 40G and 100G in
the optical space gain commercial
traction. We expect accelerated
wireless equipment funding related
to the emerging demand for wireless connectivity to devices in
both enterprise and household
applications.
We see strong positive
secular demand trends
toward cloud computing,
wireless, visualization,
and data center
transformation.
In 2015, we also believe spending priorities are shifting to the
early stages of the fifth generation
for wireless applications coming
from a rapid rise in mobile broadband and increased use of smartphones and tablets. In 2015, the
enterprise segment should gain
widespread acceptance with data
center consolidation, server virtu-
alization, and cloud computing.
The industry is undergoing a
technology shift toward convergence, where customers require a
platform to offer computing, networking, storage, and other applications all in one box. As a result of
this trend, market segments have
become more intertwined, with traditional data networking companies
finding themselves in competition
with server and computing players.
We expect the need for integrated
solutions to continue to push
companies this year to aggressively
partner or acquire missing technologies going forward.
In 2014, the S&P communications equipment sub-industry
index increased 10.4%, versus
17.2% for the information technology sector, 11.4% for the S&P 500,
and 10.9% for the S&P 1500.
We note that the sub-industry
is heavily weighted to Cisco, with a
$144 billion market cap, and Qualcomm (QCOM 68.67 ), with
$114 billion.
The table lists all of the stocks
in this sub-industry that garner a
5- (strong buy) or 4-STARS (buy)
ranking from S&P Capital IQ. 
RECOMMENDED STOCKS
COMPANY NAME / SYMBOL
Alcatel-Lucent / ALU
Ciena / CIEN
Cisco / CSCO
F5 Networks / FFIV
Juniper Networks / JNPR
Plantronics / PLT
STARS
QUALITY
RANKING
CURRENT
PRICE ($)
12-MONTH
TARGET
PRICE ($)
STYLE
P/E
RATIO*
YIELD (%)
4
4
4
4
4
4
NR
B
B+
B+
B
B+
3.87
20.36
27.73
111.97
23.31
53.33
4
25
34
145
25
56
Foreign
Blend
Growth
Blend
Blend
Blend
NM
NM
17.6
25.9
NM
20.3
Nil
Nil
2.9
Nil
1.7
1.1
Source: S&P Capital IQ. *Trailing 12 months. All data as of March 12.
www.spoutlook.com
S&P CAPITAL IQ THE OUTLOOK MARCH 16, 2015
5
FOCUS
STOCK
Ken Leon
S&P Capital IQ
Equity Analyst
Lazard
As more businesses seek advice, this investment bank stands to benefit
The Focus Stock for the week ending March 15 is Lazard Ltd., which
carries S&P Capital IQ’s highest
investment ranking of 5-STARS,
or Strong Buy. Lazard is a leading
global investment banking firm
with premier financial advisory and
asset management capabilities.
Lazard has what we view as an
interesting mix of businesses, with
financial advisory contributing 51%
of operating revenue in 2014, asset
management accounting for 48%,
and corporate the remaining 1%.
The company is well diversified by
region, with a significant portion
of its operating revenue generated
outside North America.
Like other financial service
companies, Lazard depends on its
ability to attract new employees
and retain and motivate its current
workforce.
In our opinion, Lazard’s investment in its financial advisory business in recent years is paying off.
We believe the company is likely to
gain market share as demand by
businesses for financial advice
grows and world economies
rebound. We caution, however,
that realized revenue from its
advisory business will likely
remain volatile.
The company has expanded its
global footprint to cover emerging markets, particularly in Asia
Pacific and including China. Like
most mid-size investment banking firms, Lazard emphasizes the
high level of attention it provides
from senior personnel on corporate and sovereign financial
advisory engagements.
Following revenue growth of
15% in 2014, we forecast growth
in the low teens this year, with
continued strength in investment
advisory services. In 2015, we see
continuing positive CEO confidence
as a key metric for sustaining
growth in mergers and acquisitions
(M&A). Other key drivers we see
are high corporate cash levels, new
funding of private equity firms, and
an improving U.S. economy.
Lazard has a growing pipeline
of announced M&A deals, and last
year was in the top 10 for M&A fees
for global investment banks.
For asset management, we see
positive growth in 2015 coming
from new institution engagements
and low account turnover. Lazard
had $197 billion of assets under
management (AUM) at the end of
2014. Net flows in 2014 were $3.1
billion, driven by the strategy in its
global equity platforms. Winning
significant new mandates from
institutions like public and private
pensions or sovereign funds is a
key driver in boosting AUM, in our
LAZARD
Ticker: LAZ
S&P Ranking:     
Current Price: $48.88
12-Month Target Price: $60
Market Capitalization ($ Blns): $6.12
Price/Earnings Ratio: 14.17
Yield: 2.39%
Source: S&P Capital IQ.
view. We also like the diversification and stability that asset management provides to the company
versus the highly cyclical nature of
its investment banking unit.
We see operating EPS of $3.45
in 2015, and $3.90 in 2016, versus
$3.20 in 2014, amid an improving
M&A market. We see compensation
expense ratios in the mid-50%
range this year, in line with the
55.8% in 2014. Lazard achieved
25.5% operating margins in 2014,
and we again see mid-20% operating margins in 2015.
Risks to our opinion and target
price include further weakening
in the capital markets, including
M&A activity, downward moves in
equity and fixed income markets,
and fewer contract renewals from
significant customers in the asset
management business. U.S. and
European regulatory regimes also
pose high potential risk to Lazard’s
role in the capital markets and
investment banking.
Our risk assessment also reflects
our view of Lazard’s relatively
small, albeit growing, size, widening business focus, and an
expanding set of relationships.
Our $60 target price is based
on a forward P/E multiple of
17.4X our 2015 EPS estimate,
near the high end of the historical range and near peers. We
view positively prospects for Lazard’s investment banking franchise to win its fair share of M&A
and restructuring client assignments as markets improve. We
believe Lazard’s M&A pipeline
will improve in 2015 with several
large size wins announced. 
6 S&P CAPITAL IQ THE OUTLOOK MARCH 16, 2015
www.spoutlook.com
High-Quality Capital Appreciation Portfolio
To enter the High-Quality Capital Appreciation Model
Portfolio, a stock must have a Quality Ranking of A- or
better, which indicates a 10-year history of above average
earnings and dividend growth. Stocks must have a 4-STARS
or 5-STARS ranking to enter this portfolio. S&P Capital IQ’s
Senior Portfolio Group may replace any stock in the portfolio
with another stock at any time for reasons that can include
a downgrade in STARS or Quality Ranking of the constitu-
ents or for other factors. This portfolio was launched on
May 23, 2003. From inception through February 28, 2015,
the portfolio rose at an average annualized rate of 7.48%
excluding dividends, compared with 7.15% for the S&P 500.
From December 31, 2014 to March 6, 2015, the portfolio
increased by 0.50% excluding dividends, compared with
0.60% for the S&P 500. 
HIGH-QUALITY CAPITAL APPRECIATION PORTFOLIO
ENTRY
DATE
ENTRY
PRICE ($)
CURRENT
PRICE ($)
56.23
67.68
SYMBOL
COMPANY NAME
CNI
Canadian Natl Railway
02/24/2014
CE
Celanese
04/28/2014
59.72
CI
Cigna
03/09/2015
122.04
12-MONTH
TARGET
PRICE ($)
STARS
QUALITY
RANK
90
4
A+
57.21
67
5
A-
122.75
134
5
A-
COST
Costco Wholesale
02/24/2014
113.94
149.44
164
4
A
DIS
Disney
11/14/2011
36.12
107.17
106
4
A+
EWBC
East West Bancorp
11/10/2014
37.36
40.98
45
4
A-
GE
General Electric
02/24/2014
25.29
25.40
31
4
A-
GOOGL
Google
03/09/2015
574.30
561.17
635
5
A-
JBHT
Hunt Transport
07/21/2014
78.08
86.41
92
4
A-
JNJ
Johnson & Johnson
07/22/2013
92.28
99.83
120
4
A+
MCK
McKesson
08/16/2010
60.85
225.08
266
4
A-
NKE
NIKE
10/13/2014
85.39
97.04
104
4
A+
QCOM
QUALCOMM
05/28/2013
64.07
69.37
80
3
A-
RJF
Raymond James Finl
04/28/2014
49.08
59.65
65
4
A-
SJI
South Jersey Indus
11/10/2014
57.98
53.75
58
4
A-
Source: S&P Capital IQ. All data are as of Thursday’s close.
Performance calculations do not take into account reinvestment of dividends, capital gains taxes or brokerage commissions and fees. If the foregoing had been factored into the portfolio’s
investment performance, it would have been lower. This performance calculation also does not take into account timing differences between the portfolio selections and purchases made
based on those selection by actual investors. Over certain periods, the portfolio incurred losses and over time the portfolio is expected to continue to pose a risk of negative investment
returns. Because the portfolio has a high turnover rate, it is best suited for tax-deferred accounts such as IRAs and is less suited for other accounts. Investors should seek financial advice
before investing based on the portfolio. This portfolio does not address the specific investment objectives, financial situation, and particular needs of any person. Stocks in the portfolio will not
be suitable for all investors. Past performance is no guarantee of future results.
LEADERS
NAME
Disney
LAGGARDS
YTD GAIN / LOSS
10.22%
NAME
South Jersey Industries
YTD GAIN / LOSS
-11.17%
McKesson
8.20%
Johnson & Johnson
-4.27%
Costco Wholesale
5.50%
Celanese
-3.90%
East West Bancorp
4.60%
QUALCOMM
-3.80%
Raymond James Financial
2.60%
Source: S&P Capital IQ. Current portfolio members only. Performance is based on the year to date through 3/6/2015, or, if the security was added after the start of the year, for the
time it has been a portfolio member.
www.spoutlook.com
S&P CAPITAL IQ THE OUTLOOK MARCH 16, 2015
7
Platinum Portfolio
The Platinum Model Portfolio combines the top ranked stocks from S&P
Capital IQ’s Fair Value quantitative
ranking system with those from the
Stock Appreciation Ranking System
(STARS), a qualitative stock selection
methodology.
For a stock to enter the Platinum
model portfolio, it must carry both a
STARS ranking of 5 and a Fair Value
Ranking of 5. Stocks are held in the
model portfolio for as long as they
carry a 5 ranking in at least one
system, and a ranking of at least 1 in
the other system. Due to short-term
data issues, a stock may temporarily
lose its Fair Value ranking. To reduce
turnover in the model portfolio, a
stock must lose its Fair Value ranking
for two consecutive weeks before it
is dropped from the model portfolio.
However, if a stock is dropped from
STARS coverage, it is immediately
dropped from the Platinum Model
Portfolio.
In both ranking systems, stocks
are ranked in five tiers. A 5-STARS or
“strong buy” ranking indicates the
relevant S&P Capital IQ equity analyst
expects the total return for this issue
to outperform the total return of the
S&P 500 Index by a wide margin over
the coming 12 months, with shares
rising in price on an absolute basis.
Meanwhile, a Fair Value ranking of 5
indicates the stock is significantly
undervalued compared with the Fair
Value universe. The Fair Value model
calculates a stock’s weekly Fair
Value — the price at which a stock
should trade given current market
levels — using data such as corporate
earnings, price-to-book value, return
on equity, and current yield relative to
the S&P 500.
The model portfolio was launched
on July 28, 1995. From inception
through February 28, 2015, the model
portfolio posted an average annual
return of 11.75% excluding dividends,
PLATINUM PORTFOLIO
SYMBOL
COMPANY NAME
CURRENT
PRICE ($)
STARS
FAIR
VALUE
AET
AFL
BCOR
CBT
CCL
CE
CELG
CBI
CI
CMI
DAL
DFS
EMN
EMC
RE
FDX
FTI
FOSL
GM
GILD
GOOGL
ING
IBM
JBLU
JCI
KFY
LEA
MTH
MS
NRG
PCP
QRVO
QCOM
PWR
RS
SAVE
STLD
SWFT
SNX
TSM
TM
TRV
TGI
X
UAL
URI
WU
XRX
Aetna
AFLAC
Blucora
Cabot
Carnival
Celanese
Celgene
Chicago Bridge & Iron
Cigna
Cummins
Delta Air Lines
Discover Financial Svcs
Eastman Chemical
EMC
Everest Re Group
FedEx
FMC Technologies
Fossil Group
General Motors
Gilead Sciences
Google
ING Groep ADS
Intl. Business Machines
JetBlue Airways
Johnson Controls
Korn/Ferry
Lear
Meritage Homes
Morgan Stanley
NRG Energy
Precision Castparts
Qorvo
QUALCOMM
Quanta Services
Reliance Steel & Aluminum
Spirit Airlines
Steel Dynamics
Swift Transportation
Synnex
Taiwan Semiconductor
Toyota Motor
Travelers
Triumph Group
U.S. Steel
United Continental Holdings
United Rentals
Western Union
Xerox
102.12
62.65
14.61
44.00
45.29
57.21
118.82
47.28
122.75
140.04
45.33
59.88
70.62
26.17
178.61
173.58
36.64
80.43
38.43
99.93
561.17
14.37
157.98
18.10
49.13
31.63
108.16
43.78
37.09
23.28
209.95
73.42
69.37
28.14
57.21
76.61
18.32
28.69
73.82
23.53
137.53
107.83
59.57
22.63
67.74
88.20
19.58
12.67
5
3
5
5
4
5
5
5
5
5
5
4
5
5
5
5
5
4
5
5
5
5
4
5
5
5
5
5
5
5
5
5
3
5
5
5
5
5
5
5
5
5
5
5
5
5
5
4
4
5
5
4
5
5
5
5
5
5
5
5
5
5
4
4
5
5
5
5
4
5
5
5
4
4
5
4
4
5
5
5
5
5
5
5
5
5
5
5
4
5
5
3
5
5
5
5
Source: S&P Capital IQ. All data are as of Thursday’s close.
compared with 6.96% for the S&P
500. For the period from December
31, 2014 to March 6, 2015, the model
portfolio rose by 1.67% excluding
dividends, compared with a 0.60% rise
in the S&P 500. 
8 S&P CAPITAL IQ THE OUTLOOK MARCH 16, 2015
www.spoutlook.com
The Observatory
Selected actions for March 9 to March 13
NEW
STARS
OLD
STARS
STARS
RANKING
DATE
PRICE ($)
Alcoa / AA
4
3
3/9/2015
13.72
Associated Banc-Corp / ASB
4
3
3/11/2015
Astoria Financial / AF
4
3
McDonald’s / MCD
2
3
National Fuel Gas / NFG
3
Neenah Paper / NP
12 MONTH
TARGET
PRICE ($)
QUALITY
RANK
FAIR VALUE
RANK
16
B-
2
18.89
20
B
3
3/10/2015
12.90
14
B-
NR
3/10/2015
96.63
90
A
2
2
3/13/2015
59.21
62
B+
2
2
3
3/12/2015
61.04
58
B
2
Papa John’s International / PZZA
1
3
3/10/2015
62.34
50
B+
1
Qualcomm / QCOM
3
5
3/10/2015
69.48
80
A-
5
South Jersey Industries / SJI
4
5
3/10/2015
53.22
58
A-
NR
Superior Industries International / SUP
2
3
3/10/2015
18.68
17
B-
NR
Take-Two Interactive Software / TTWO
3
2
3/9/2015
24.74
26
C
3
Tech Data / TECD
3
2
3/12/2015
54.04
54
B+
5
Urban Outfitters / URBN
4
3
3/10/2015
44.97
49
B+
5
Vail Resorts / MTN
4
3
3/12/2015
95.60
100
B-
1
Wells Fargo / WFC
3
2
3/12/2015
55.48
55
A-
3
COMPANY NAME / SYMBOL
Source: S&P Capital IQ. NR-Not ranked.
For intraday STARS changes, subscribers can visit www.spoutlook.com and click on the STOCKS tab.
The Observatory provides a selection of analytical actions — upgrades, downgrades, initiations — from S&P Capital IQ. Stocks featured in the Observatory are
selected by The Outlook according to factors including, but not limited to, newsworthiness, capitalization, and inclusion in a portfolio published by The Outlook.
Please note that all investments carry risks. Investors should seek ﬁnancial advice before investing.
All of the views expressed in this research report accurately reﬂect the research analysts’ personal views regarding any and all of the subject securities or issuers.
No part of the analysts’ compensation was, is, or will be, directly or indirectly, related to the speciﬁc recommendations or views expressed in this research report.
IPOs and Activists
Activist investors sure haven’t stayed
quiet. A substantial number of initial
public offerings (IPOs) priced in the
past year possess significant ownership by activist investors. Of these 96
IPOs, 15 activists own 10% or more of
their common shares.
Property and casualty insurer
James River Group Holdings (JRVR
23 NR), which has more than 39% of
its shares activist-owned, leads the
way. In this case, D.E. Shaw & Co. L.P.
controls 33.8% of James River Group,
making it the largest individual activist
shareholder.
The next largest activist stake is
found in Nexvet Biopharma (NVET 10
NR), in which San Francisco-based
investment manager Farallon Capital
Management LLC controls 27.5%.
And in third, Forward Pharma (FWP
24 NR) has 26.3% of its shares owned
by activists. Boston-based hedge
fund The Baupost Group LLC holds the
Richard Peterson
Global Markets Intelligence
Director
largest stake in the pharmaceutical
company at 23.4%.
The top 10 list is rounded out by
Townsquare Media (TSQ 13 NR), where
activists own 26.19%; Opus Bank (OPB
31 NR), 23.26%; Square 1 Financial
(SQBK 27 NR), 21.26%; FCB Financial
(FCB 27 NR), 20.71%; SunEdison
(SEMI 24 NR), 19.21%; WL Ross Holding (WLRH 10 NR), 15.99%; and Fifth
Street Asset Management (FSAM 12
NR), 15.65%. 