By Standard & Poor's The Outlook

The Top Ten Portfolio comprises stocks that S&P Capital IQ believes to be well positioned for solid capital appreciation over the next 12 months.

The goal of the Top Ten Portfolio is to outperform the S&P 500 index on a capital appreciation basis. Stocks must have our highest five-STARS ranking to enter the portfolio. This dynamic, actively managed portfolio has outperformed the S&P 500 since inception.

If the ranking drops below four STARS, the stock will be removed. All of the stocks in the portfolio are currently ranked five STARS.

S&P Capital IQ's Senior Portfolio Group, a subcommittee of our Investment Policy Committee, selects the stocks.

The intention of the portfolio is to be fairly balanced among economic sectors. The portfolio currently has eight large-cap stocks and two small-cap issues.

It has three stocks from the consumer staples sector, two issues each from information technology and industrials, and one stock each from the financials, consumer discretionary, and materials sectors.

1. American Tower (AMT): We expect a 14% revenue increase in 2012
2. Applied Materials (AMAT): World's largest maker of wafer fabrication equipment
3. Coach (COH): Number one luxury accessories brand in the U.S.
4. Coca-Cola (KO): World's largest producer of soft drinks
5. FedEx (FDX): World's largest provider of guaranteed express delivery services
6. General Mills (GIS): International expansion should be a long-term growth driver
7. International Business Machines (IBM): We value the company's well-diversified offerings
8. Kelly Services (KELYA): Should benefit from focus on non-skilled temporary workers
9. Neenah Paper (NP): A global manufacturer of fine and specialty paper
10. Philip Morris (PM): The largest publicly-traded tobacco company

This focused portfolio was launched on December 31, 2001. This year through February 10, the portfolio rose 8.4%, while the S&P 500 climbed 6.8%.

Since inception through January 31, 2012, the portfolio gained 2.1% (annualized) vs. a 1.3% increase for the S&P 500. Readers should note that past performance is no guarantee of future results.

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