ARG

A list of the 25 top performing stocks of 2010 (ex. Financials) from within the S&P 500 index. We have taken the top 25 companies from 2010 and provided our readers 3 attractive and 5 unattractive stocks from this list based on their valuation attractiveness relative to sector peers and overall investment opportunity using key criteria that The Applied Finance Group (AFG) uses in its stock selection process including corporate performance, management quality and earnings quality to see which of the top performers still look to have upside and which look like they have run out of room to run.

Our thoughts on Air Products & Chemicals (NYSE:APD) unsolicited bid to acquire smaller peer, Airgas (NYSE:ARG), for $7 billion, including $1.9 billion in assumed debt, or $60 per share. We provide our analysis of the embedded sales growth each company needs to achieve to justify there current stock price as well as who is getting the better end of this potential acquisition.

The Applied Finance Group (AFG) has a disciplined approach for identifying companies that are expected to outperform and underperform the market by using proprietary metrics and measurements that have been tested and proven through time. Because AFG’s research is fundamentally derived, AFG’s quantitative analysis spans across growth and value stocks, all sectors, industries, and market caps with over 20,000 covered securities globally. Using AFG’s proprietary criteria, AFG publishes a monthly buy/sell list to provide clients with a refined focused list as a starting point for potential investments. AFG clients can then use Value Expectations to further analyze the expectations embedded in a security’s price and to build out their own model to refine an intrinsic value of a company based on their own expectations.

When searching for Large-Cap ideas, AFG’s Buy/Sell list is a good starting place as it has proven to create a significant spread in performance between companies that come up on AFG’s buy list and those on the sell list. Further focusing on companies based on AFG’s proprietary screening criteria (Economic Margin, valuation, quality of earnings, and management’s ability to create shareholder wealth) will save investors time in their research process.  The result is a target group of stocks that can help you outperform as well as identify potential torpedoes to avoid in your portfolios.

Below is a list of attractive and unattractive companies in the S&P 500 from each major sector (as defined by AFG).  It serves as a focus list of companies for investors to begin with as they meet AFG’s criteria.  They are more likely to outperform their sector peers and the S&P 500, the benchmark that AFG’s clients most often compare themselves with.

AFG Investment Opportunity Rank within Sector Ticker Name Sector Valuation Signal EM Change Signal Attractive S&P 500 companies from each AFG Sector (NYSE: ARG) AIRGAS INC Basic Material Attractive Attractive Positive (NYSE: SEE) SEALED AIR CORP Basic Material Attractive Attractive Positive (NYSE: WAT) WATERS CORP Capital Goods Attractive Attractive Positive (NYSE: DO) DIAMOND OFFSHRE DRILLING Capital Goods Attractive Attractive Positive (NYSE: HAS) HASBRO INC Consumer Durable Attractive Attractive Positive (NYSE: CL) COLGATE-PALMOLIVE CO Consumer Non Durable Attractive Attractive Positive (NYSE: TAP) MOLSON COORS BREWING CLB Consumer Non Durable Attractive Attractive Positive (NYSE: MCD) MCDONALD'S CORP Consumer Services Attractive Attractive Positive (NYSE: MCD) CVS CAREMARK CORP Consumer Services Attractive Attractive Positive (NYSE: NEM) NEWMONT MINING CORP Energy and Extraction Attractive Attractive Positive (NASDAQ:CEPH)  CEPHALON INC Health Attractive Attractive Positive (NYSE:TMO)  THERMO FISHER SCIENTIFIC Health Attractive Attractive Positive (NYSE:S)  SPRINT NEXTEL CORP Technology Attractive Attractive Positive (NASDAQ:SYMC)  SYMANTEC CORP Technology Attractive Attractive Positive (NYSE:PEG)  PUBLIC SVC ENTPRS GROUP Utilities Attractive Attractive Positive (NYSE:D) DOMINION RESOURCES VA Utilities Attractive Attractive Positive Unattractive S&P 500 companies from each AFG Sector (NYSE:PH) PARKER HANNIFIN CORP Basic Material Unattractive Unattractive Negative (NYSE:X) UNITED STATES STEEL CORP Basic Material Unattractive Unattractive Negative (NYSE:ETN)  EATON CORP Capital Goods Unattractive Unattractive Negative (NYSE:SWK)  STANLEY WORKS THE Capital Goods Unattractive Unattractive Negative (NYSE:IGT) INTERNAT GAME TECHNOLOGY Consumer Durable Unattractive Unattractive Negative (NYSE:FO) FORTUNE BRANDS INC Consumer Durable Unattractive Unattractive Negative (NYSE:RL)  POLO RALPH LAUREN CORP Consumer Non Durable Unattractive Unattractive Negative (NYSE:TSN)  TYSON FOODS INC Consumer Non Durable Unattractive Unattractive Negative (NYSE:MAR)  MARRIOTT INTERNAT INC A Consumer Services Unattractive Unattractive Negative (NYSE:MWW)  MONSTER WORLDWIDE INC Consumer Services Unattractive Unattractive Negative (NYSE:BTU) PEABODY ENERGY CORP Energy and Extraction Unattractive Unattractive Negative (NYSE:EOG)  EOG RESOURCES INC Energy and Extraction Unattractive Unattractive Negative (NASDAQ:SIAL) SIGMA-ALDRICH CORP Health Unattractive Unattractive Negative (NASDAQ:ISRG)  INTUITIVE SURGICAL INC Health Unattractive Unattractive Negative (NYSE:MU)  MICRON TECHNOLOGY INC Technology Unattractive Unattractive Negative (NASDAQ:CIEN)  CIENA CORP Technology Unattractive Unattractive Negative (NYSE:EQT)  EQT CORP Utilities Unattractive Unattractive Negative (NYSE:NU)  NORTHEAST UTILITIES Utilities Unattractive Unattractive Negative

Source: EconomicMargin.com

AFG's Valuation Metric – Measures the percent to target (deviation between a stock’s current trading price and its AFG current default target price). To derive the intrinsic value of a firm, AFG uses its proprietary Valuation Model (modified discounted cash flow model).

Economic Margin - A corporate performance measurement that addresses the gaps in GAAP, eliminating distortions caused by accounting policies to measure what a company is truly earning above or below their cost of capital.

Management Quality – Assesses management’s ability to make wealth creating decisions.

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