Ascendere Weekly Ranking: Cardinal Health and Marathon Oil Look Very Attractive

Ascendere Associates Weekly Ranking Update:  January 7, 2011

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Every week, we include in this report a list of the highest quality and lowest quality stocks as defined by four key factors: 1) Relative Value; 2) Operating Momentum; 3) Analyst Revision Momentum; and 4) Fundamental Quality.  At the end of each month, we take roughly 1/3 of the stocks on this list to construct our various long/short and long-only model portfolios based on real trade data.  But as you can read below, there are several other ways to use this data.

This week 63 stocks make the “high-quality” list versus 65 last week, with 9 additions and 11 deletions.  29 stocks make the “low-quality” list in line with 29 last week, with5 additions and 4 deletions.  There are three very interesting new “high-quality” names this week, including Cardinal Health, Inc. (CAH), ConocoPhilips (COP) and Marathon Oil Corporation (MRO).

Three ways to use this newsletter:

1. Build your own hedge fund. Use data in this report at discretion or as an enhancement to our model portfolio strategy newsletter.
2. Anticipate sell side research ratings changes. It is not uncommon to find these stocks presaging changes to sell side price targets, ratings or conviction lists.
3. Generate relevant long-term ideas for further study. Buy and hold still does work.  We do the heavy lifting and find you “high-quality” stocks; you provide the incremental research time and effort.

Examples of just a few recent sell side actions that we have presaged since December 31, 2010

• 1/10/2011 — Parker-Hannifin Corporation (PH) — Goldman Sachs upgrades stock to Buy from Neutral and raises stock price target to $105 from $92.
• 1/7/2011 — T. Rowe Price Group, Inc. (TROW) — Deutsche Bank raises price target to $65 from $58.
• 1/7/2011 — East West Bancorp Inc. (EWBC) – Goldman Sachs initiated with a Buy rating and $24.50 price target.
• 1/7/2011 — Freeport McMoRan Copper & Gold Inc. (FCX) – Canaccord upgrades to Buy from Hold, raising target to $135 from $98.
• 1/6/2011 — PNC Financial Services Group Inc (PNC) — UBS names the stock a short-term Buy.  Nomura initiates coverage of the stock with a Buy rating and $73 target.