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WolfeTrahan.com Portfolio Strategy | March 31, 2010 Page 2 of 13

CCOONNSS UUMMEERR DDIISS CCRREETTIIOONNAARRYY:: TTHHEE SS EE LLLL--SS IIDDEE SS LLEEAASS TT FF AAVVOORRIITTEE SS EE CCTTOORR Although analysts as a whole have the lowest expected 12-month return for the Discretionary sector,there are a still a handful of stocks in the group in which they see a lot of upside. At the industry level,analysts have the highest expectations (i.e., price targets) for Diversified Consumer Service companiesand Internet & Catalog Retail. In contrast, prices have moved beyond the sell- sides targets for Autos asof late. According to their current estimates, this group is overvalued today.

Expected Returns By Industry (12-Month) Price Target For LTD Has Risen Much Faster Than S15.5%

15.2%6.7%6.7%6.5%6.4%

5.8%

5.6%4.0%3.7%3.7%

3.0%-7.4%

-10.0% -5.0% 0.0% 5.0% 10.0% 15.0% 20.0%

Diversified Cons umer ServicesInternet & Catalog Retail

MediaHousehold Durables

Sector Multiline Retail

Textiles Apparel & Luxury Goods

Specialty Retail Auto Components

Hotels Restaurants & LeisureDistributors

Leisure Equipment & Products Automobiles

Expected 12-M onth Return

0.04

0.05

0.060.07

0.08

0.09

0.10

0.11

0.12

0.04

0.05

0.060.07

0.08

0.09

0.10

0.11

0.12

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Limited Brands (LTD)

Relative Per formance Rela ti ve Mean Analyst Target to Sec tor

Source: Wolfe Trahan & Co. Portfolio Strategy.

From our database, we are able to not only see what analysts price targets are, but also whichcompanies have the highest and lowest projected EPS growth in the next year. The tables belowhighlight the stocks with the highest and lowest price and EPS expectations in the Discretionary sector.

Highest & Lowest Analysts Expected 12 -Month Returns

Ticker Name Industry Market Cap Price Target E(r)GCI Gannett Co Media 3,592.93 16.79 21.80 30% APOL Apollo Group Inc -Cl A Diversified Consumer Services 9,274.51 62.21 77.35 22%IGT Intl Game Technology Hotels Restaurants & Leisure 5,205.32 18.50 22.29 21%EXPE Expedia Inc Internet & Catalog Retail 6,439.12 24.44 28.94 19% AMZN Amazon.Com Inc Internet & Catalog Retail 52,569.60 136.48 160.11 18%

Highest Expected Return

Ticker Name Industry Market Cap Price Target E(r)HOT Starwood Hotels&Resorts Wrld Hotels Restaurants & Leisure 7,228.58 47.41 41.00 -11%F Ford Motor Co Automobiles 39,543.45 13.35 11.69 -14%ODP Office Depot Inc Specialty Retail 1,983.60 8.20 6.88 -16%EK Eastman Kodak Co Leisure Equipment & Products 1,595.67 5.86 4.33 -28%SHLD Sears Holdings Corp Multiline Retail 11,002.05 109.31 66.80 -39%

Lowest Expected Return

Highest & Lowest Analysts Earnings Expectations

Ticker Name Industry Price EPS NTM EPS Growth

HOG Harley-Davidson Inc Automobiles 28.21 0.06 1.05 1653%WYNN Wynn Resorts Ltd Hotels Restaurants & Leisure 77.55 0.23 0.66 186%NYT New York Times Co -Cl A Media 11.17 0.25 0.64 155%IPG Interpublic Group Of Cos Media 8.44 0.15 0.32 112%CBS Cbs Corp Media 14.13 0.50 0.94 88%

Highest EPS Growth Expectations


MAR Marriott Intl Inc Hotels Restaurants & Leisure 31.85 0.94 0.93 -1%CMCSA Comcast Corp Media 18.70 1.26 1.24 -2%HRB Block H & R Inc Diversified Consumer Services 17.85 1.48 1.37 -7%WYN Wyndham Worldwide Corp Hotels Restaurants & Leisure 25.97 1.80 1.63 -9%HOT Starwood Hotels&Resorts Wrld Hotels Restaurants & Leisure 47.41 1.01 0.66 -34%

Lowest EPS Growth Expectations

Analysts areexpecting a lot of

good news from GCand APOL! Are thetargets too high orare analysts ahead

of the curve?

Please email us [email protected]

for more detail onprice target (expected

return) and EPSestimates at thesector, industry

and/or stock level.

Starwood Hotels(HOT):A lot of

downside alreadbeing recognized

analysts!
mailto:[email protected]:[email protected]:[email protected]

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CCOONNSS UUMMEERR SS TTAAPP LLEESS :: EEVVEE RRYY IINNDDUUSS TTRRYY HHAASS LLOOWWEERR PP RRIICCEE EEXXPP EECCTTAATTIIOONNSS TTHHAANN TTHHEE SS &&PP 550000!! It is no surprise that the expectations for Staples are below the market. As the economy recovers, theless cyclical industries (i.e., more defensive stocks) usually see lower growth rates. At the industry level,the sell-side is most bullish on Beverages and least optimistic on Personal Products. A stock worthhighlighting is Estee Lauder (EL). Its relative mean price target has risen sharply since 2009 alongsiderelative performance and now sits at the highest level since the last peak in 2000.

Expected Returns By Industry (12-Month) Expectations For EL Shooting Up Relative To Sector!

10.6%

9.2%

8.5%

8.0%

7.9%

7.9%

5.6%

0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0%

Beverages

Sector

Tobacco

Food Products

Household Products

Food & Staples Ret ailing

Personal Products

Expected 12-Mo nth Return

0.08

0.13

0.18

0.23

0.28

0.33

0.08

0.13

0.18

0.23

0.28

0.33

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Estee Lauder Cos. (EL)

Relative Per formance Relative Mean Analyst Target to Sec to r


Within the Staples sector, analysts have the largest upside price targets in Archer-Daniel Midland (AMD,+27%) and Lorillard (LO, +17%). There are also a handful of short-opportunities that the sell-side sees inthe Staples sector, particularly on Supervalu Inc. (SVU, -10%) and Hershey (HSY, -9%).


Ticker Name Industry Market Cap Price Target E(r) ADM Archer-Daniels-Midland Co Food Products 18,878.48 28.78 37.00 27%

LO Lorillard Inc Tobacco 11,394.24 74.94 87.88 17%TAP Molson Coors Brewing Co Beverages 7,486.45 42.19 48.18 15%

KR Kroger Co Food & Staples Retailing 14,201.45 21.34 24.37 14%

DF Dean Foods Co Food Products 2,638.66 15.76 17.94 14%


Ticker Name Industry Market Cap Price Target E(r)

CCE Coca-Cola Enterprises Inc Beverages 12,553.42 27.83 26.50 -6%

SLE Sara Lee Corp Food Products 9,455.74 13.98 13.06 -6%

WFMI Whole Foods Market Inc Food & Staples Retailing 6,045.97 36.23 33.64 -7%

HSY Hershey Co Food Products 9,065.20 43.01 39.09 -9%

SVU Supervalu Inc Food & Staples Retailing 3,237.24 16.65 14.71 -10%

Lowest Expteced Return

Highest & Lowest Analysts Expected EPS Growth Ticker Name Industry Price EPS NTM EPS GrowthTSN Tyson Foods Inc -Cl A Food Products 19.14 0.98 1.37 39%

WFMI Whole Foods Market Inc Food & Staples Retailing 36.23 0.96 1.30 35% ADM Archer-Daniels-Midland Co Food Products 28.78 2.19 2.84 30%DPS Dr Pepper Snapple Group Inc Beverages 35.38 1.97 2.36 20%

AVP Avon Products Personal Products 34.06 1.72 2.04 19%


Ticker Name Industry Price EPS NTM EPS GrowthDF Dean Foods Co Food Products 15.76 1.60 1.54 -4%

SJM Smucker (Jm) Co Food Products 60.24 4.38 4.19 -4%TAP Molson Coors Brewing Co Beverages 42.19 3.80 3.47 -9%

PG Procter & Gamble Co Household Products 63.60 4.19 3.79 -10%SVU Supervalu Inc Food & Staples Retailing 16.65 2.23 1.94 -13%


Analysts relative target for EL is at thehighest level since 2000.

Archer-DanielsMidland (ADM)

Analysts see anearnings recovery

bolstering the stock

price in the comingyear!

Please email us [email protected]



and/or stock level.

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EENNEERRGGYY:: TTHHEE SS EELLLL--SS IIDDEE SS FF AAVVOORRIITTEE SS EECCTTOORR !! The sell- sides fundamental analysts are the most bullish on Energy stocks, expecting gains of over 19%in the next year. As a side note, we know that oil prices are the major driver of the Energy sector swe did a simple regression to determine what price of oil was consistent with 19% upside from here. Wefound that this expected return is an implicit forecast for a 27% gain in oil prices. This would suggest thatanalysts may be modeling oil prices near $100 by 2011.

Analysts Expecting $100 Oil By 2011? SLBs Relative Target Is Rising Back To 07/08 Levels

0.08

0.10

0.120.14

0.16

0.18

0.20

0.22

0.08

0.10

0.120.14

0.16

0.18

0.20

0.22

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Schlumberger Ltd. (SLB)

Relative Performance Relative Mean Analyst Target to Sector


At the industry level, Energy Equipment and Services have the highest expected return at 27% followedby Oil, Gas & Consumable Fuels at 17.1%. Looking at the Energy stocks, analysts expect huge gains innames such as CHK and COG while they believe that BJS and SII are overvalued today.


Ticker Name Industry Market Cap Price Target E(r)CHK Chesapeake Energy Corp Oil Gas & Consumable Fuels 17,208.64 23.16 35.25 51%COG Cabot Oil & Gas Corp Oil Gas & Consumable Fuels 4,160.67 36.71 54.00 45%SWN Southwestern Energy Co Oil Gas & Consumable Fuels 14,717.06 40.15 58.07 43%NBR Nabors Industries Ltd Energy Equipment & Services 6,270.40 19.38 27.49 41%HAL Halliburton Co Energy Equipment & Services 27,195.29 30.08 41.28 38%



VLO Valero Energy Corp Oil Gas & Consumable Fuels 9,893.59 19.88 20.45 3%

FTI Fmc Technologies Inc Energy Equipment & Services 6,843.13 65.01 64.13 2%

SUN Sunoco Inc Oil Gas & Consumable Fuels 3,083.84 28.76 28.56 -1%

BJS Bj Services Co Energy Equipment & Services 6,416.07 20.96 18.75 -10%

SII Smith International Inc Energy Equipment & Services 10,175.11 42.58 37.28 -12%


Highest & Lowest Analysts Expected EPS Growth


BJS Bj Services Co Energy Equipment & Services 20.96 0.06 0.59 881%

MEE Massey Energy Co Oil Gas & Consumable Fuels 52.78 1.04 2.76 166%

MRO Marathon Oil Corp Oil Gas & Consumable Fuels 31.40 1.62 3.47 114%

HES Hess Corp Oil Gas & Consumable Fuels 62.04 2.28 4.18 83%

APA Apache Corp Oil Gas & Consumable Fuels 99.60 5.60 9.26 65%


Ticker Name Industry Price EPS NTM EPS GrowthNOV National Oilwell Varco Inc Energy Equipment & Services 40.48 3.94 3.23 -18%RDC Rowan Cos Inc Energy Equipment & Services 28.56 2.98 2.37 -21%COG Cabot Oil & Gas Corp Oil Gas & Consumable Fuels 36.71 1.72 1.26 -27%EP El Paso Corp Oil Gas & Consumable Fuels 10.77 1.29 0.88 -32%XTO Xto Energy Inc Oil Gas & Consumable Fuels 47.12 3.58 2.01 -44%


Analysts believe thesenames are the most

undervalued

and these stocksare the mostovervalued!

Contact us atstrategy@wolfetrahan.

for more detail oprice target (expec


and/or stock leve
mailto:[email protected]:[email protected]

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FF IINNAANNCC IIAALLSS :: AANNAALLYYSS TTSS PP RREEFFEERR F F I I N N AA N N C C I I AA LL M M AA R R K K E E T T S S TTOO R R E E AA LL E E S S T T AA T T E E M M AA R R K K E E T T S S Its clear from analysts expected returns that they believe more in the capital markets recovery thanthey do in the real estate recovery. The industry groups with the largest expected returns are CapitalMarkets and Diversified Financials. In contrast, analys ts price targets for Real Estate companiesindicate they are overvalued. Net-net, analysts believe the sector will rise by 9.4% over the next year.

Expected Returns By Industry (12-Month) CapitalOnes Relative Target Near Past Peak Levels

16.2%

16.0%

9.4%

9.3%

9.3%

4.9%

2.1%

-6.6%

-9.9%

-15. 0% -10. 0% -5. 0% 0. 0% 5. 0% 10. 0% 15. 0% 20. 0%

Capital Markets

Diversified Financial Services

Sector

Consumer F inance

Thrifts & Mortgage Finance

Insurance

Commercial Banks

Real Estate Investment Trusts (REITs)

Real Estate Management & Development

Expected 12-Month Return

0.07

0.09

0.11

0.13

0.15

0.17

0.19

0.21

0.23

0.07

0.09

0.11

0.13

0.15

0.17

0.19

0.21

0.23

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Capital One Financial Corp (COF)

Relative Performance Relative Mean Analyst Target to Sec tor


Bulge bracket banks rank at the top of the list of companies with the largest expected returns. BothMorgan Stanley (MS) and Goldman Sachs (GS) are expected to gain over 20% by this time next year.At the other end of the spectrum, REITs dominate the list of stocks where analysts believe stocks aretoo expensive. There are four REITs with downside price targets greater than 10%.


Ticker Name Industry Market Cap Price Target E(r)MS Morgan Stanley Capital Markets 38,341.55 29.06 36.45 24%GS Goldman Sachs Group Inc Capital Markets 80,538.08 171.54 211.45 21%STT State Street Corp Capital Markets 22,227.47 45.69 55.81 21%IVZ Invesco Ltd Capital Markets 8,218.27 21.65 25.75 20%XL Xl Capital Ltd Insurance 6,250.51 18.68 22.35 19%


Ticker Name Industry Market Cap Price Target E(r) AVB Avalonbay Communities Inc Real Estate Investment Trusts (REITs) 6,638.09 87.05 76.53 -12%

HST Host Hotels & Resorts Inc Real Estate Investment Trusts (REITs) 7,568.17 14.74 12.86 -12% AIV Apartment Invt &Mgmt -Cl A Real Estate Investment Trusts (REITs) 1,944.05 18.44 15.49 -16% AIG American International Group Insurance 3,345.71 34.25 28.75 -17%KIM Kimco Realty Corp Real Estate Investment Trusts (REITs) 5,632.85 16.02 13.38 -17%



Ticker Name Industry Price EPS NTM EPS GrowthDFS Discover Financial Svcs Inc Consumer Finance 15.11 0.24 0.81 239%COF Capital One Financial Corp Consumer Finance 41.98 0.67 2.12 217%GNW Genworth Financial Inc Insurance 17.45 0.42 1.15 175%

HIG Hartford Financial Services Insurance 27.99 1.31 3.22 146% AXP American Express Co Consumer Finance 41.20 1.54 2.67 73%



XL Xl Capital Ltd Insurance 18.68 2.68 2.30 -14%

GS Goldman Sachs Group Inc Capital Markets 171.54 21.77 18.44 -15%

PNC Pnc Financial Svcs Group Inc Commercial Banks 58.31 4.34 3.61 -17%

PLD Prologis Real Estate Investment Trusts (REITs) 13.43 1.61 0.73 -55%

FITB Fifth Third Bancorp Commercial Banks 13.22 0.71 (0.22) -131%


AVB is not only aboits mean analyst pritarget it is also rigat the highest analytarget on the Street

of yesterday! This

hasnt happened sin2006! Email us for chart!

Many of the REITstocks are at or above

the highest analystprice target this

does not occur veryoften!

(AVB, HST, AIV, KIM)

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HHEE AALLTTHH CC AARREE :: SS EE LLLL--SS IIDDEE SS TTIILLLL FF AAVVOORRSS TTHHEE PP EERREENNNNIIAALL UUNNDDEERRPP EERRFF OORRMMEERRSS ((PP HHAARRMMAA!!)) The sell-side expects Health Care stocks to outperform the market over the next 12 months. The largestexpected returns are forecasted to come from the Pharmaceuticals and Biotechnology industries.Analysts expect Life Science Tools & Services to lag the group the most.

Expected Returns By Industry (12-Month) BSXs Relative Target Is At A 10-Year Low

14.2%

12.8%

11.8%

11.8%

7.2%

5.7%

0.0% 2. 0% 4.0% 6.0% 8.0% 10.0% 12.0% 14. 0% 16.0%

Pharmaceuticals

Biotechnology

Sector

Health C are Providers & Services

Health Care Equipment & Supplies

Life Sciences T ools & Services


0.00

0.02

0.04

0.06

0.08

0.10

0.12

0.14

0.00

0.02

0.04

0.06

0.08

0.10

0.12

0.14

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Boston Scientific Corp. (BSX)



At the stock level, Pfizer (PFE) is expected to see the largest price appreciation over the next 12 monthswhile Millipore (MIL) is the most overvalued according to the sell-side. Tenet Healthcare is one thatmakes both lists below stocks with the highest price and EPS gains over the next year. Notice that thestocks with the largest forecasted upside price appreciation are generally larger in size.


Ticker Name Industry Market Cap Price Target E(r)PFE Pfizer Inc Pharmaceuticals 141,628.40 17.20 22.25 29%THC Tenet Healthcare Corp Health Care Providers & Services 2,535.58 5.79 7.32 24%GILD Gilead Sciences Inc Biotechnology 42,837.24 45.62 55.56 21%UNH Unitedhealth Group Inc Health Care Providers & Services 38,837.42 33.18 39.13 19% ABT Abbott Laboratories Pharmaceuticals 84,197.40 52.80 63.07 19%


Ticker Name Industry Market Cap Price Target E(r)PKI Perkinelmer Inc Life Sciences Tools & Services 2,599.08 24.32 24.00 -1%ISRG Intuitive Surgical Inc Health Care Equipment & Supplies 13,364.89 346.76 338.67 -3%BIIB Biogen Idec Inc Biotechnology 15,119.77 57.68 56.71 -3%BMY Bristol-Myers Squibb Co Pharmaceuticals 42,010.13 26.80 25.69 -5%MIL Millipore Corp Life Sciences Tools & Services 5,257.50 105.65 97.00 -8%




THC Tenet Healthcare Corp Health Care Providers & Services 5.79 0.14 0.22 60%

ESRX Express Scripts Inc Health Care Providers & Services 101.55 3.52 4.92 40%

ISRG Intuitive Surgical Inc Health Care Equipment & Supplies 346.76 5.93 7.78 31%

CELG Celgene Corp Biotechnology 62.17 2.08 2.63 27%

MYL Mylan Inc Pharmaceuticals 22.64 1.30 1.59 22%


Ticker Name Industry Price EPS NTM EPS GrowthUNH Unitedhealth Group Inc Health Care Providers & Services 33.18 3.24 3.07 -5%HUM Humana Inc Health Care Providers & Services 47.15 6.15 5.50 -11%BSX Boston Scientific Corp Health Care Equipment & Supplies 7.22 0.50 0.42 -15%KG King Pharmaceuticals Inc Pharmaceuticals 11.89 1.10 0.92 -16%CAH Cardinal Health Inc Health Care Providers & Services 36.36 2.94 2.24 -24%


Tenet Healthcare(THC): Analysts s

an earnings recovebolstering the stoc price in the comin

year!

Contact us [email protected]



and/or stock level.

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IINNDDUUSS TTRR IIAALLSS :: AANNAALLYYSS TTSS SS TTIILLLL FF AAVVOORR TTHHEE FFOORREEIIGGNN--FFOOCCUUSS EEDD IINNDDUUSS TTRRYY GG RROOUUPP SS In aggregate, analysts expect the Industrials sector to underperform the S&P 500. Overall, the sector isexpected to return 6.6%, much lower than the expected return of 12% for the market. Historically, thissector has had strong exposure to foreign sales, which has done well for the sector in the past. Analystscontinue to favor those industries within the sector that are highly levered towards foreign sales.

Expected Returns By Industry (12-Month) 3Ms Expectations Have Begun To Fall From Recent Hig11.9%

11.2%10.0%

8.1%6.8%6.6%

4.7%3.7%

1.5%1.5%1.4%

-3.0%-6.0%

-8.0% -4.0% 0.0% 4.0% 8.0% 12.0% 16.0%

Construction & EngineeringCommerc ial Services & Supplies

Industrial Conglomerates Air Freight & Logistics

Road & RailSector

MachineryElectrical Equipment

Professional Services Aerospace & Defense

Trading Companies & Dis tributors Airlines

Building Products


0.10

0.15

0.20

0.25

0.30

0.35

0.40

0.10

0.15

0.20

0.25

0.30

0.35

0.40

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

3M Co. (MMM)



While Airlines and Building Products have negative expected returns over the next 12 months, it isimportant to note these industries constitute the smallest portion of the Industrials sector. While thesector has the second lowest expected return amongst the ten GICS sectors, there are still a few stockswithin the sector that analysts believe will outperform in the next year (see table below).

Highest & Lowest Analysts Expecte d 12-Month Returns


PWR Quanta Services Inc Construction & Engineering 3,990.76 19.13 24.53 26%RRD Donnelley (R R) & Sons Co Commercial Services & Supplies 4,091.37 21.58 27.00 26%IRM Iron Mountain Inc Commercial Services & Supplies 5,267.79 27.41 34.20 23%SNA Snap-On Inc Machinery 2,437.99 43.60 51.70 20%ITW Illinois Tool Works Machinery 22,866.33 47.50 56.36 19%


Ticker Name Industry Market Cap Price Target E(r)BA Boeing Co Aerospace & Defense 45,872.53 73.32 71.04 -4%

RHI Robert Half Intl Inc Professional Services 4,147.20 30.99 29.79 -4%NOC Northrop Grumman Corp Aerospace & Defense 18,798.55 65.69 61.94 -6%MAS Masco Corp Building Products 4,684.85 15.39 14.40 -6%PCAR Paccar Inc Machinery 12,867.08 43.75 38.44 -12%


Highest & Lowest Analysts Expected EPS Growth Ticker Name Industry Price EPS NTM EPS GrowthMAS Masco Corp Building Products 15.39 0.07 0.42 500%LUV Southwest Airlines Airlines 12.93 0.18 0.60 235%PCAR Paccar Inc Machinery 43.75 0.31 0.87 180%BA Boeing Co Aerospace & Defense 73.32 1.83 4.05 121%RHI Robert Half Intl Inc Professional Services 30.99 0.24 0.48 100%



HON Honeywell International Inc Aerospace & Defense 44.99 2.85 2.40 -16%

JEC Jacobs Engineering Group Inc Construction & Engineering 45.31 2.85 2.36 -17%

FSLR First Solar Inc Electrical Equipment 121.54 7.54 6.12 -19%

FLR Fluor Corp Construction & Engineering 47.01 3.76 2.99 -20%

TXT Textron Inc Industrial Conglomerates 21.64 0.61 0.48 -21%


?

Paccar has thelowest expected

return, but hasone the highestearnings growth

expectations.

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MMAATTEE RRIIAALLSS :: AANNAALLYYSS TTSS SS TTIILLLL PP RREEFFEERR TTHHEE HHYYPP EE RR --CCYYCCLLIICC AALL TTRR AADDEE WWIITTHHIINN MMAATTEERRIIAALLSS Analysts believe the commodity based industries of Metals & Mining and Paper & Forest Products willlead the materials sector in the coming year. In all, the Metals & Mining universe is the largest within theMaterials sector as well as possesses the highest beta. Within the S&P 500, the Materials sector has thesecond-highest expected return, trailing only Energy. Below we highlight Vulcan Materials (VMC), theonly stock within Construction Materials. VMC has one of the deepest discounts to sector expectations.

Expected Returns By Industry (12-Month) VMC Showing A Deep Discount To Sector Expectat

14.1%

14.0%

13.4%

13.0%

11.4%

7.6%

0.0% 4.0% 8.0% 12.0% 16.0%

Metals & Mining

Paper & Forest Products

Chemicals

Sector

Containers & Pac kaging

Construction Materials


0.15

0.20

0.250.30

0.35

0.40

0.45

0.50

0.55

0.15

0.20

0.250.30

0.35

0.40

0.45

0.50

0.55

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Vulcan Materials (VMC)

Rela tive Pe rformance Rela tive Mean Ana lys t Targe t to Sector


While the Metals & Mining space has the highest expected return amongst the Materials industries,analysts expect some differentiation in the group. As the table below highlights, some Metals & Miningcompanies are amongst the leaders and laggards in expected return for the sector.


Ticker Name Industry Market Cap Price Target E(r)MON Monsanto Co Chemicals 38,529.32 71.42 90.84 28% AA Alcoa Inc Metals & Mining 12,959.24 14.37 17.99 25%FCX Freeport-Mcmoran Cop&Gold Metals & Mining 32,318.80 83.60 102.40 24%PTV Pactiv Corp Containers & Packaging 3,276.59 25.30 30.80 21% APD Air Products & Chemicals Inc Chemicals 14,549.45 73.90 89.47 20%



IFF Intl Flavors & Fragrances Chemicals 3,333.30 47.73 47.43 -1%

ARG Airgas Inc Chemicals 5,271.60 63.99 61.56 -4%

X United States Steel Corp Metals & Mining 7,588.95 63.49 62.30 -4%

ATI Allegheny Technologies Inc Metals & Mining 4,281.74 54.55 49.13 -12%

TIE Titanium Metals Corp Metals & Mining 2,117.48 16.81 13.43 -22%



Ticker Name Industry Price EPS NTM EPS GrowthCLF Cliffs Natural Resources Inc Metals & Mining 71.50 1.05 5.10 385% ATI Allegheny Technologies Inc Metals & Mining 54.55 0.46 1.47 219%VMC Vulcan Materials Co Construction Materials 47.39 0.13 0.40 204%DOW Dow Chemical Chemicals 29.71 0.59 1.48 151%

IP Intl Paper Co Paper & Forest Products 25.13 0.89 1.45 63%



BLL Ball Corp Containers & Packaging 53.38 4.05 4.35 7%

MON Monsanto Co Chemicals 71.42 3.41 3.40 0%

CF Cf Industries Holdings Inc Chemicals 92.27 7.28 6.85 -6%

PTV Pactiv Corp Containers & Packaging 25.30 2.49 2.33 -6%

TIE Titanium Metals Corp Metals & Mining 16.81 0.20 0.13 -38%


While being thMaterials industwith the highesexpected return

there is somedisparity in

expectationswithin Metals

Mining

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TTEE LLEE CCOOMM:: EEXXPP EECCTTAATTIIOONNSS FFOORR CC YYCCLLIICC AALL TTEE LLEECCOOMMSS MMUUCCHH HHIIGGHHEE RR TTHHAANN DDIIVVEERRSS IIFF IIEEDDSS While Telecom is by far the smallest of the 10 GICS sectors in the S&P 500 and has the lowest beta,analysts expectations for the sector are almost in -line with the market. Out of the two Telecomindustries, analysts expect Wireless Services to have the strongest performance within the sector andoutperform the market, as illustrated in the chart below.

Expected Returns By Industry (12-Month) Price Target For CTL Has Risen Much Faster Than Se

15.8%

10.0%

9.2%

0.0% 4.0% 8.0% 12.0% 16.0% 20.0%

Wireless Telecommunication Services

Sector

Diversif ied T elecommunication Services


0.05

0.100.15

0.20

0.25

0.30

0.35

0.40

0.05

0.100.15

0.20

0.25

0.30

0.35

0.40

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Centruy Tel Inc. (CTL)



Interestingly, as shown in the table below, all Telecom companies are expected to have a positive returnover the next year. Despite this, there are a few companies within the sector whose earnings areexpected to decline in the coming year. One example, Metropcs (PCS), is expected to outperform themarket (13% vs. 12%) but is predicted to exhibit the largest decline in earnings within the sector (-13%).



S Sprint Nextel Corp Wireless Telecommunication Services 9,900.09 3.79 4.44 17%

AMT American Tower Corp Wireless Telecommunication Services 17,132.12 42.64 49.31 15%

PCS Metropcs Communications Inc Wireless Telecommunication Services 2,176.23 7.08 7.86 13%

T At&T Inc Diversified Telecommunication Services 146,426.90 25.93 29.40 11%

VZ Verizon Communications Inc Diversified Telecommunication Services 82,035.85 31.22 32.81 8%



WIN Windstream Corp Diversified Telecommunication Services 4,424.78 10.92 11.62 6%

CTL Centurytel Inc Diversified Telecommunication Services 10,253.20 35.55 36.93 4%

FTR Frontier Communications Corp Diversified Telecommunication Services 2,433.03 7.45 7.65 3%

Q Qwest Communication Intl Inc Diversified Telecommunication Services 7,885.36 5.22 5.42 3%


Highest & Lowe st Analysts Expected EPS Growth Ticker Name Industry Price EPS NTM EPS Growth

FTR Frontier Communications Corp Diversified Telecommunication Services 7.45 0.39 0.58 48%

AMT American Tower Corp Wireless Telecommunication Services 42.64 0.60 0.85 42%

WIN Windstream Corp Diversified Telecommunication Services 10.92 0.76 0.86 13%

T At&T Inc Diversified Telecommunication Services 25.93 2.12 2.19 3%


Ticker Name Industry Price EPS NTM EPS GrowthCTL Centurytel Inc Diversified Telecommunication Services 35.55 3.45 3.26 -6%Q Qwest Communication Intl Inc Diversified Telecommunication Services 5.22 0.38 0.34 -12%PCS Metropcs Communications Inc Wireless Telecommunication Services 7.08 0.49 0.42 -13%


Mean expectereturns for all

Telecom stockare positive fothe forthcomin

year.

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UUTTIILLIITTIIEESS :: HHUUGGEE BBUULLLLIISS HH TTIILLTT TTOOWWAARR DDSS IINNDDEEPP EE NNDDEENNTT PP OOWWEE RR PP RROODDUUCCEE RRSS !! Utilities, often the unfashionable, high-dividend, low-beta sector play in the S&P 500, is expected toreturn 9.8% in the upcoming year. While the sector in whole is anticipated to underperform the market,the real draw within the sector is Independent Power Producers & Energy Traders and Gas Utilitieswhich analysts predict to strongly outperform the S&P 500.

Expected Returns By Industry (12-Month) Pepco Expectations Remain Muted Despite Discoun

32.3%

20.3%

9.8%

8.2%

4.4%

0.0% 4.0% 8.0% 12.0%16.0%20.0%24.0%28.0%32.0%36.0%

Independent Power Prod.& En. Traders

Gas Ut ilities

Sector

Electric Utilities

Multi-Utilities


0.08

0.10

0.12

0.14

0.16

0.18

0.20

0.22

0.08

0.100.12

0.14

0.16

0.18

0.20

0.22

0.24

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Pepco Holdin gs Inc. (POM)

Rela tive Per formance Relati ve Mean Analyst Target to Sector


While Independent Power Producers & Energy Traders and Gas Utilities are the industries with thehighest expected returns, Electric Utilities seem to show the highest potential for earnings growth (seetable below). Even though NRG Energy has one of the highest expected returns (32%) within the sector,

it is by far anticipated to have the greatest decline in earnings (-40%).Highest & Lowest Analysts Expected 12 -Month Returns


AES Aes Corp Independent Power Producers & Energy Traders 7,805.18 11.06 17.33 54%

EQT Eqt Corp Gas Utilities 5,729.54 40.95 55.40 34%

NRG Nrg Energy Inc Independent Power Producers & Energy Traders 5,547.25 21.10 27.23 32%

STR Questar Corp Gas Utilities 7,331.45 43.08 53.91 25%

PPL Ppl Corp Electric Utilities 10,742.17 27.88 32.75 17%


Ticker Name Industry Market Cap Price Target E(r)DTE Dte Energy Co Multi-Utilities 7,181.67 45.22 43.69 -4%POM Pepco Holdings Inc Electric Utilities 3,738.58 17.04 16.05 -5%TEG Integrys Energy Group Inc Multi-Utilities 3,349.20 47.29 44.25 -6%GAS Nicor Inc Gas Utilities 1,884.45 42.18 39.67 -6%

AEE Ameren Corp Multi-Utilities 5,866.15 26.01 23.00 -11%




PPL Ppl Corp Electric Utilities 27.88 1.96 3.37 72%

POM Pepco Holdings Inc Electric Utilities 17.04 0.90 1.28 43%

TEG Integrys Energy Group Inc Multi-Utilities 47.29 2.41 3.34 38%

PNW Pinnacle West Capital Corp Electric Utilities 37.95 2.28 3.03 33%

EQT Eqt Corp Gas Utilities 40.95 1.49 1.79 20%


Ticker Name Industry Price EPS NTM EPS GrowthFE Firstenergy Corp Electric Utilities 38.79 3.77 3.55 -6%EXC Exelon Corp Electric Utilities 44.02 4.11 3.77 -8%STR Questar Corp Gas Utilities 43.08 2.81 2.40 -15% AEE Ameren Corp Multi-Utilities 26.01 2.82 2.31 -18%NRG Nrg Energy Inc Independent Power Producers & Energy Traders 21.10 3.39 2.04 -40%


Expectations areextremely high for

these twoindustries.

Expectationswithin Utilitiesare elevated.

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