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Lehman Brothers just announced its ten top stock picks for the coming year, known as Lehman's 10 Uncommon Values. This year's list includes Microsoft (ticker: MSFT). Here's what Lehman says about Microsoft and about its 10 Uncommon Values:


On Microsoft

After several years of underperformance, Microsoft shares are likely to benefit from several new product cycles that we think will drive multiple expansion and earnings acceleration. The releases of Xbox 360 and SQL Server 2005 are scheduled for fiscal 2Q06. Longhorn, the long-awaited upgrade to Windows, should provide an additional  catalyst to shares as investors begin to discount its release during the 2006 holiday season. Windows Server sales remain robust, growing in  the mid-teens, and could continue to gain share at the expense of Unix in the enterprise market. The stock is attractively priced at current  levels, in our view.

The other nine stocks in the 2005-6 list were:

  • The Allstate Corporation (ticker: ALL)
  • Applied Materials, Inc. (ticker: AMAT)
  • Bed Bath & Beyond Inc. (ticker: BBBY)
  • Dell Inc. (ticker: DELL)
  • Dow Jones & Company, Inc. (ticker: DJ)
  • Freddie Mac (ticker: FRE)
  • Pfizer Inc. (ticker: PFE)
  • Phelps Dodge  Corporation (ticker: PD)
  • Wal-Mart Stores, Inc. (ticker: WMT)

On 10 Uncommon Values

In its history, Lehman Brothers’ 10 Uncommon Values has beaten the S&P 500 73% of the time, delivering a 14.3% average annual return vs. 8.2% for the S&P 500. Last year, the 10 Uncommon Values outperformed the S&P 500 by 523 basis points. Past performance is no  guarantee of future results.

...After the intensive screening process in which Lehman Brothers analysts present their ideas to the 10 Uncommon Values Selection Committee for analysis, the list of stocks is reviewed again to determine which companies offer the best investment ideas for the coming year. Finally, the 10 Uncommon Values Selection Committee selects what it believes to be the best 10 ideas — that year's 10 Uncommon Values.

...As always, the 10 Uncommon Values represent stocks which Lehman Brothers believes will outperform the Standard & Poor's 500 Stock Index. Although past performance does not guarantee future performance, Lehman Brothers believes that its methodology has been a significant contributor to the success of the 10 Uncommon Values.

More on Lehman's web site here.

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Source: Lehman Bros announces 10 Uncommon Values 2005-6; includes Microsoft (MSFT)