Watch This Exposure

In the past year, the SEC has investigated more than 120 companies over the backdating of executive stock options. The agency thinks companies improperly or illegally manipulated the exercise price on stock options they granted to their managers, to expand the manager’s profits at the expense of investors.

Only four of our recommendations are on the SEC list. Any restatements will likely be small, but serious charges could come out of this investigation. That’s why we think you should limit your total exposure to companies that are included in the investigation.

APPLE COMPUTER INC. $90 (Nasdaq symbol AAPL; Aggressive Growth Portfolio, Manufacturing & Industry sector; WSSF Rating: Extra risk) hit a new all-time high on speculation that it will soon launch a iPod music player/mobile phone. Hold.

AUTODESK INC. $41 (Nasdaq symbol ADSK; Aggressive Growth Portfolio, Manufacturing & Industry sector; WSSF Rating: Average) has moved up on growing demand for its new 3-D modeling software. Hold.

BARNES & NOBLE INC. $40 (New York symbol BKS; Aggressive Growth Portfolio, Consumer sector; WSSF Rating: Average) is enhancing its loyalty card program to spur book sales before Christmas. Buy.

NVIDIA CORP. $37 (Nasdaq symbol NVDA; Aggressive Growth Portfolio, Manufacturing & Industry sector; WSSF Rating: Average) makes video chips for Sony’s new PlayStation 3, but profitability is uncertain. Hold.