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S&P's 40 PowerPicks Stocks for 2008

After beating their own benchmark index for the last five years, Standard & Poor’s equity research team is betting on the biggest U.S. jam maker and the Magic Kingdom to outperform again in 2008.

J.M. Smucker and Walt Disney are among 40 companies in this year’s PowerPicks portfolio, a list selected from the 10 major sectors based on fundamental valuation. The diversified approach allows investors to capture the best bargains before the rest of the market notices, according to S&P director of equity research Stephen Biggar.

“Some portfolio managers chase individual themes and performance, so they miss the bottom 20-30 percent of a move higher,” he told CNBC. “If they’re big in one name and it doesn’t work out, it can be detrimental to performance.”

The PowerPicks portfolio generated an 8.8% return last year, compared with a 5.5% gain for the S&P500. The list, which won’t change over the course of 2008, also includes medical-equipment maker Thermo Fisher Scientific and consumer companies with strong name recognition such as Coach and Estee Lauder.

Here's the complete list:

Consumer Discretionary

  • Best Buy
  • Coach
  • Group 1 Automotive
  • Stanley Works
  • Walt Disney

Consumer Staples

  • Altria Group
  • Coca-Cola
  • CVS Caremark
  • Estee Lauder
  • J.M. Smucker

Energy

  • Baker Hughes
  • Mariner Energy
  • Superior Energy Services

Financials

  • AFLAC
  • Bank of America
  • Chubb
  • City National
  • Cullen Frost Bankers
  • Simon Property Group

Health Care

  • Aetna
  • Covance
  • Hologic
  • Merck
  • Psychiatric Solutions
  • Thermo Fisher Scientific

Industrials

  • FedEx
  • Goodrich
  • Harsco
  • Lincoln Electronic Holdings
  • Manitowoc

Information Technology

  • Cognizant Technology Solutions
  • Corning
  • eBay
  • EMC
  • Microsoft
  • Netgear
  • Oracle

Materials

  • FMC

Telecom

  • AT&T

Utilities

  • ONEOK

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