The 500 Best Stocks (according to Barron's, anyway)

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by Erik Conley

May 6, 2013

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Cover Story:  The Barron’s 500

Every year Barron’s publishes a list of what they consider the best 500 stocks in the market. Here is the methodology they use to come up with the list.

The Barron’s 500 is an exclusive ranking of the 500 largest publicly traded companies in the U.S. and Canada, as measured by sales in the latest fiscal year. The survey is prepared by HOLT, a unit of Credit Suisse, which grades and ranks all companies on the basis of three equally weighted measures: median three-year return on investment, based on a proprietary cash-flow metric called CFROI; the change in CFROI in the latest fiscal year relative to the three-year median; and sales growth in the latest fiscal year, adjusted for pro forma results (and, in the case of cigarette companies, taxes that are collected and remitted to the government).

HOLT’s CFROI metric strips out the effects of inflation and adjusts for accounting distortions, including the  capitalization of research and development, and off-balance-sheet operating leases.  For financial companies, the firm calculates cash-flow return on tangible equity.  All data are based on the companies’ latest reported fiscal year, which for most is  2012.

Each company is graded in three categories; the top quintile gets an A, the bottom, an F. HOLT then calculates the total grade-point average, or GPA, for each company, with 4.0 the highest. In cases where scores are tied, the ranking is based on one-year CFROI relative to the three-year median. The Barron’s 500 excludes companies restating financial data or operating under bankruptcy protection.

This year, Apple is #1. If this surprises you, you’re not alone. The stock has lost some of its’ stature, and it has come down in price from $705 to $400, but the fundamentals remain strong, according to the screening algorithms used by HOLT.

#3 on the list is Western Digital, and #6 is Qualcomm. The fact that these three companies are ranked so high is an indication of how out-of-favor tech stocks are, given the current preference for steady, high-yielding stocks.

Here is the complete list.

Rank Company Ticker GPA
1 Apple AAPL 4
2 Wesco International WCC 4
3 Western Digital WDC 4
4 DaVita HealthCare Partners DVA 4
5 C.H. Robinson Worldwide CHRW 4
6 Qualcomm QCOM 4
7 Joy Global JOY 4
8 Visa V 4
9 Seagate Technology STX 3.67
10 MRC Global MRC 3.67
11 MasterCard MA 3.67
12 CVR Energy CVI 3.67
13 Capital One Financial COF 3.67
14 Symantec SYMC 3.67
15 McKesson MCK 3.67
16 WellCare Health Plans WCG 3.67
17 Eaton ETN 3.67
18 Broadcom BRCM 3.67
19 Thermo Fisher Scientific TMO 3.67
20 Cigna CI 3.67
21 Chicago Bridge & Iron CBI 3.67
22 National Oilwell Varco NOV 3.67
23 Western Refining WNR 3.33
24 HollyFrontier HFC 3.33
25 Delek  US Holdings DK 3.33
26 Discover Financial Services DFS 3.33
27 Altria Group MO 3.33
28 American Express AXP 3.33
29 Caterpillar CAT 3.33
30 Las Vegas Sands LVS 3.33
31 Agrium AGU 3.33
32 Toronto Dominion Bank TD 3.33
33 Estée Lauder EL 3.33
34 Actavis ACT 3.33
35 Parker-Hannifin PH 3.33
36 W.W. Grainger GWW 3.33
37 Marsh & McLennan MMC 3.33
38 TJX TJX 3.33
39 Bank of Nova Scotia BNS 3.33
40 O’Reilly Automotive ORLY 3.33
41 CBRE Group CBG 3.33
42 Dover DOV 3.33
43 Fluor FLR 3.33
44 Deere DE 3.33
45 Aflac AFL 3.33
46 Ross Stores ROST 3.33
47 Erie Indemnity ERIE 3.33
48 Cameron International CAM 3.33
49 Automatic Data Processing ADP 3.33
50 AutoZone AZO 3.33
51 EMC EMC 3.33
52 CVS Caremark CVS 3.33
53 NetApp NTAP 3.33
54 Accenture ACN 3.33
55 Celgene CELG 3.33
56 AmerisourceBergen ABC 3
57 PBF Energy PBF 3
58 CF Industries Holdings CF 3
59 Agilent Technologies A 3
60 Canadian Imperial Bank CM 3
61 Leucadia National LUK 3
62 Eastman Chemical EMN 3
63 Reynolds American RAI 3
64 Starwood Hotels & Resorts HOT 3
65 Monsanto MON 3
66 International Business Machines IBM 3
67 Jabil Circuit JBL 3
68 Bank of Montreal BMO 3
69 Rockwell Automation ROK 3
70 Philip Morris International PM 3
71 Lincoln National LNC 3
72 CBS CBS 3
73 Mattel MAT 3
74 Mylan MYL 3
75 L Brands LTD 3
76 Quanta Services PWR 3
77 Nabors Industries NBR 3
78 Royal Bank of Canada RY 3
79 Home Depot HD 3
80 BlackRock BLK 3
81 VF VFC 3
82 Hershey HSY 3
83 Liberty Interactive LINTA 3
84 J.B. Hunt Transport Services JBHT 3
85 Allergan AGN 3
86 Oracle ORCL 3
87 United Technologies UTX 3
88 Yum! Brands YUM 3
89 Henry Schein HSIC 3
90 Universal Health Services UHS 3
91 Catamaran1 CTRX 3
92 Ralph Lauren RL 3
93 Cognizant Tech Solutions CTSH 3
94 Alon USA Energy ALJ 2.67
95 Motorola Solutions MSI 2.67
96 Marriott International MAR 2.67
97 Marathon Petroleum MPC 2.67
98 Tesoro TSO 2.67
99 Paccar PCAR 2.67
100 American International Group AIG 2.67
101 AGCO AGCO 2.67
102 Wynn Resorts WYNN 2.67
103 Textron TXT 2.67
104 BB&T BBT 2.67
105 Harris HRS 2.67
106 Tech Data TECD 2.67
107 Smithfield Foods SFD 2.67
108 Foot Locker FL 2.67
109 Valero Energy VLO 2.67
110 Macy’s  M 2.67
111 CC Media Holdings CCMO 2.67
112 Viacom  VIAB 2.67
113 W.R. Berkley WRB 2.67
114 Anixter International AXE 2.67
115 Omnicare OCR 2.67
116 Liberty Global LBTYA 2.67
117 Dick’s Sporting Goods DKS 2.67
118 Nordstrom JWN 2.67
119 Ecolab ECL 2.67
120 PetSmart PETM 2.67
121 Cardinal Health CAH 2.67
122 Costco Wholesale COST 2.67
123 General Electric GE 2.67
124 Illinois Tool Works ITW 2.67
125 U.S. Bancorp USB 2.67
126 Whole Foods Market WFM 2.67
127 Honeywell International HON 2.67
128 Bed Bath & Beyond BBBY 2.67
129 United Natural Foods UNFI 2.67
130 Dollar Tree DLTR 2.67
131 Berkshire Hathaway BRK.B 2.67
132 Kraft Foods Group KRFT 2.67
133 Starbucks SBUX 2.67
134 HCA Holdings HCA 2.67
135 Fidelity National Info Svcs FIS 2.67
136 Halliburton HAL 2.67
137 SAIC SAI 2.67
138 Sherwin-Williams SHW 2.67
139 Emcor Group EME 2.67
140 Danaher DHR 2.67
141 Omnicom OMC 2.67
142 AON AON 2.67
143 Schlumberger SLB 2.67
144 Dollar General DG 2.67
145 Fidelity National Financial FNF 2.67
146 Progressive PGR 2.67
147 Google GOOG 2.67
148 Precision Castparts PCP 2.67
149 PVH PVH 2.67
150 World Fuel Services INT 2.67
151 General Mills GIS 2.67
152 URS URS 2.67
153 J.M. Smucker SJM 2.67
154 Priceline.com PCLN 2.67
155 Gilead Sciences GILD 2.67
156 Facebook FB 2.67
157 Express Scripts Holding ESRX 2.67
158 Terex TEX 2.33
159 Fifth Third Bancorp FITB 2.33
160 NCR NCR 2.33
161 Cummins CMI 2.33
162 SunTrust Banks STI 2.33
163 BorgWarner BWA 2.33
164 Wells Fargo WFC 2.33
165 Imperial Oil IMO 2.33
166 Genuine Parts GPC 2.33
167 Reliance Steel & Aluminum RS 2.33
168 Comcast CMCSA 2.33
169 Weyerhaeuser WY 2.33
170 Harley-Davidson HOG 2.33
171 Lear LEA 2.33
172 Stanley Black & Decker SWK 2.33
173 Marathon Oil MRO 2.33
174 Baker Hughes BHI 2.33
175 Walt Disney DIS 2.33
176 Canadian National Railway CNI 2.33
177 Xerox XRX 2.33
178 Union Pacific UNP 2.33
179 Bank of New York Mellon BK 2.33
180 PPG Industries PPG 2.33
181 Magna International MGA 2.33
182 Johnson Controls JCI 2.33
183 Core-Mark Holding CORE 2.33
184 Time Warner TWX 2.33
185 AutoNation AN 2.33
186 Gannett GCI 2.33
187 Hertz Global Holdings HTZ 2.33
188 Group 1 Automotive GPI 2.33
189 Family Dollar Stores FDO 2.33
190 Andersons ANDE 2.33
191 Penske Automotive Group PAG 2.33
192 Baxter International BAX 2.33
193 Casey’s General Stores CASY 2.33
194 Live Nation Entertainment LYV 2.33
195 Stryker SYK 2.33
196 Emerson Electric EMR 2.33
197 DirecTV DTV 2.33
198 Booz Allen Hamilton Holding BAH 2.33
199 Abbott Laboratories ABT 2.33
200 Johnson & Johnson JNJ 2.33
201 Dr Pepper Snapple Group DPS 2.33
202 Sysco SYY 2.33
203 Windstream WIN 2.33
204 Colgate-Palmolive CL 2.33
205 Coca-Cola KO 2.33
206 CarMax KMX 2.33
207 Procter & Gamble PG 2.33
208 AbbVie ABBV 2.33
209 Reinsurance Group of America RGA 2.33
210 Nike NKE 2.33
211 Kellogg K 2.33
212 FMC Technologies FTI 2.33
213 eBay EBAY 2.33
214 Amazon.com AMZN 2.33
215 UnitedHealth Group UNH 2.33
216 Microsoft MSFT 2.33
217 Oshkosh OSK 2.33
218 Aetna AET 2.33
219 Molina Healthcare MOH 2.33
220 Centene CNC 2.33
221 Delphi Automotive DLPH 2
222 Sun Life Financial SLF 2
223 Dillard’s DDS 2
224 Huntsman HUN 2
225 Nucor NUE 2
226 Ashland ASH 2
227 MGM Resorts International MGM 2
228 Cenovus Energy CVE 2
229 Allstate ALL 2
230 TRW Automotive Holdings TRW 2
231 Tenneco TEN 2
232 Pilgrim’s Pride PPC 2
233 FedEx FDX 2
234 Ball BLL 2
235 Avnet AVT 2
236 Mohawk Industries MHK 2
237 Delta Air Lines DAL 2
238 Ingredion INGR 2
239 Ameriprise Financial AMP 2
240 Hartford Financial Services HIG 2
241 News Corp. NWSA 2
242 Host Hotels & Resorts HST 2
243 Telus TU 2
244 Con-way CNW 2
245 Canadian Pacific Railway CP 2
246 United Stationers USTR 2
247 3M MMM 2
248 Edison International EIX 2
249 Lockheed Martin LMT 2
250 Principal Financial Group PFG 2
251 Southern Copper SCCO 2
252 Ingersoll-Rand IR 2
253 Kroger KR 2
254 Brookfield Asset Management BAM 2
255 Intel INTC 2
256 Tenet HealthCare THC 2
257 Kohl’s KSS 2
258 Weatherford International WFT 2
259 Shaw Communications SJR 2
260 Health Management Associates HMA 2
261 Darden Restaurants DRI 2
262 Avis Budget Group CAR 2
263 Vanguard Health Systems VHS 2
264 Simon Property Group SPG 2
265 Wal-Mart Stores WMT 2
266 Raytheon RTN 2
267 Quest Diagnostics DGX 2
268 Community Health Systems CYH 2
269 Gap GPS 2
270 ConAgra Foods CAG 2
271 Ingram Micro IM 2
272 Covidien COV 2
273 Amgen AMGN 2
274 PepsiCo PEP 2
275 Hormel Foods HRL 2
276 Humana HUM 2
277 Cisco Systems CSCO 2
278 Western Union WU 2
279 WellPoint WLP 2
280 Boeing BA 2
281 Susser Holdings SUSS 2
282 SPX SPW 2
283 Biogen Idec BIIB 2
284 Goldman Sachs Group GS 2
285 Laboratory Corp. of America LH 2
286 Clorox CLX 2
287 United States Steel X 1.67
288 Dana Holding DAN 1.67
289 Commercial Metals CMC 1.67
290 Timken TKR 1.67
291 DuPont DD 1.67
292 Allegheny Technologies ATI 1.67
293 ManpowerGroup MAN 1.67
294 Kindred Healthcare KND 1.67
295 CNA Financial CNA 1.67
296 Bemis BMS 1.67
297 Lowe’s LOW 1.67
298 Ryder System R 1.67
299 International Paper IP 1.67
300 Synnex SNX 1.67
301 BCE BCE 1.67
302 Verizon Communications VZ 1.67
303 TE Connectivity TEL 1.67
304 Southwest Airlines LUV 1.67
305 Kimberly-Clark KMB 1.67
306 Insight Enterprises NSIT 1.67
307 Jarden JAH 1.67
308 Time Warner Cable TWC 1.67
309 Northrop Grumman NOC 1.67
310 Chesapeake Energy CHK 1.67
311 Bunge BG 1.67
312 Charter Communications CHTR 1.67
313 Dean Foods DF 1.67
314 Unum UNM 1.67
315 McDonald’s MCD 1.67
316 United Parcel Service UPS 1.67
317 Masco MAS 1.67
318 Sonic Automotive SAH 1.67
319 Target TGT 1.67
320 Seaboard SEB 1.67
321 Northeast Utilities NU 1.67
322 EOG Resources EOG 1.67
323 Thomson Reuters TRI 1.67
324 AES AES 1.67
325 Coca-Cola Enterprises CCE 1.67
326 Pantry PTRY 1.67
327 Duke Energy DUK 1.67
328 Becton Dickinson BDX 1.67
329 Advance Auto Parts AAP 1.67
330 Aecom Technology ACM 1.67
331 Mosaic MOS 1.67
332 Prudential Financial PRU 1.67
333 Owens & Minor OMI 1.67
334 Franklin Resources BEN 1.67
335 ACE ACE 1.67
336 UGI UGI 1.67
337 L-3 Communications Holdings LLL 1.67
338 St. Jude Medical STJ 1.67
339 Assurant AIZ 1.67
340 Medtronic MDT 1.67
341 Mondelez International2 MDLZ 1.67
342 Manulife Financial MFC 1.33
343 Regions Financial RF 1.33
344 Anadarko Petroleum APC 1.33
345 Phillips 66 PSX 1.33
346 AK Steel Holding AKS 1.33
347 Talisman Energy TLM 1.33
348 Citigroup C 1.33
349 TravelCenters Of America TA 1.33
350 Whirlpool WHR 1.33
351 Williams WMB 1.33
352 Level 3 Communications LVLT 1.33
353 ExxonMobil XOM 1.33
354 PartnerRe PRE 1.33
355 Peabody Energy BTU 1.33
356 Celestica CLS 1.33
357 Bristol-Myers Squibb BMY 1.33
358 TransCanada TRP 1.33
359 Sprint Nextel S 1.33
360 Potash Corp. of Saskatchewan POT 1.33
361 CSX CSX 1.33
362 Caesars Entertainment CZR 1.33
363 Goldcorp GG 1.33
364 Tyco International TYC 1.33
365 XL Group XL 1.33
366 CenturyLink CTL 1.33
367 Interpublic Group IPG 1.33
368 MetroPCS Communications PCS 1.33
369 Praxair PX 1.33
370 Barrick Gold ABX 1.33
371 Rite Aid RAD 1.33
372 Waste Management WM 1.33
373 Crown Holdings CCK 1.33
374 Murphy Oil MUR 1.33
375 Tyson Foods TSN 1.33
376 Staples SPLS 1.33
377 Jacobs Engineering Group JEC 1.33
378 Walgreen WAG 1.33
379 Canadian Natural Resources CNQ 1.33
380 Occidental Petroleum OXY 1.33
381 Big Lots BIG 1.33
382 Arrow Electronics ARW 1.33
383 JPMorgan Chase JPM 1.33
384 Republic Services RSG 1.33
385 PNC Financial Services PNC 1.33
386 Newell Rubbermaid NWL 1.33
387 Transocean RIG 1.33
388 Campbell Soup CPB 1.33
389 Expeditors International EXPD 1.33
390 NRG Energy NRG 1.33
391 State Street STT 1.33
392 General Dynamics GD 1.33
393 Exelon EXC 1.33
394 Hewlett-Packard HPQ 1.33
395 Aegean Marine Petroleum Network ANW 1.33
396 Freeport-McMoRan Copper & Gold FCX 1.33
397 Goodyear Tire & Rubber GT 1
398 Enbridge ENB 1
399 Ameren AEE 1
400 Consolidated Edison ED 1
401 Ford Motor F 1
402 Targa Resources TRGP 1
403 Kelly Services KELYA 1
404 Hess HES 1
405 Chevron CVX 1
406 Norfolk Southern NSC 1
407 R.R. Donnelley RRD 1
408 Domtar UFS 1
409 MetLife MET 1
410 CMS Energy CMS 1
411 Owens-Illinois OI 1
412 CenterPoint Energy CNP 1
413 American Electric Power AEP 1
414 Oneok OKE 1
415 Steel Dynamics STLD 1
416 Royal Caribbean Cruises RCL 1
417 Applied Materials AMAT 1
418 Sealed Air SEE 1
419 Newmont Mining NEM 1
420 Avery Dennison AVY 1
421 Air Products & Chemicals APD 1
422 Telephone & Data Systems TDS 1
423 General Cable BGC 1
424 Travelers TRV 1
425 MeadWestvaco MWV 1
426 GameStop GME 1
427 Merck MRK 1
428 Computer Sciences CSC 1
429 Autoliv ALV 1
430 Archer-Daniels-Midland ADM 1
431 Rogers Communications RCI 1
432 KBR KBR 1
433 Huntington Ingalls Industries HII 1
434 Dish Network DISH 1
435 Fairfax Financial Holdings FRFHF 1
436 Texas Instruments TXN 1
437 Cliffs Natural Resources CLF 1
438 Best Buy BBY 1
439 Spirit AeroSystems Holdings SPR 1
440 Avon Products AVP 1
441 Teck Resources TCK 1
442 SanDisk SNDK 1
443 Health Net HNT 1
444 Exelis XLS 1
445 BlackBerry3 BBRY 1
446 Encana ECA 0.67
447 Visteon VC 0.67
448 Calpine CPN 0.67
449 Office Depot ODP 0.67
450 Owens Corning OC 0.67
451 Xcel Energy XEL 0.67
452 Morgan Stanley MS 0.67
453 NiSource NI 0.67
454 Dow Chemical DOW 0.67
455 Southern Co. SO 0.67
456 Sempra Energy SRE 0.67
457 ConocoPhillips COP 0.67
458 Pepco Holdings POM 0.67
459 Alcoa AA 0.67
460 Entergy ETR 0.67
461 Apache APA 0.67
462 PG&E PCG 0.67
463 Safeway SWY 0.67
464 DTE Energy DTE 0.67
465 Suncor Energy SU 0.67
466 Genworth Financial GNW 0.67
467 AT&T T 0.67
468 Corning GLW 0.67
469 Celanese CE 0.67
470 Supervalu SVU 0.67
471 General Motors GM 0.67
472 Pfizer PFE 0.67
473 Cablevision Systems CVC 0.67
474 Carnival CCL 0.67
475 Barnes & Noble BKS 0.67
476 United Continental Holdings UAL 0.67
477 Chubb CB 0.67
478 Loews L 0.67
479 Eli Lilly LLY 0.67
480 Rock-Tenn RKT 0.67
481 Boston Scientific BSX 0.67
482 Alpha Natural Resources ANR 0.67
483 PPL PPL 0.33
484 Sears Holdings SHLD 0.33
485 Dominion Resources D 0.33
486 Sanmina SANM 0.33
487 Frontier Communications FTR 0.33
488 Devon Energy DVN 0.33
489 NextEra Energy NEE 0.33
490 Spectra Energy SE 0.33
491 Public Service Enterprise Group PEG 0.33
492 Consol Energy CNX 0.33
493 Advanced Micro Devices AMD 0.33
494 NII Holdings NIHD 0.33
495 Navistar International NAV 0.33
496 Bank of America BAC 0
497 FirstEnergy FE 0
498 Federal-Mogul FDML 0
499 Micron Technology MU 0
500 J.C. Penney JCP 0
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About the author 

Erik Conley

Former head of equity trading, Northern Trust Bank, Chicago. Teacher, trainer, mentor, market historian, and perpetual student of all things related to the stock market and excellence in investing.

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