CAMPBELL SOUP CO. $33 (New York symbol CPB; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 379.6 million; Market cap: $12.5 billion; WSSF Rating: Above average) is the world’s largest maker of canned soups, and has 70% of the soup market in the United States. It also makes sauces and canned pasta (under the Prego brand), cakes and cookies (Pepperidge Farm) and vegetable juices (V8). Wal-Mart accounts for 15% of Campbell’s total sales. In the past few years, the company has sold off its less promising businesses to focus on its core operations and brands.

Narrower focus pays off

Campbell’s sales rose from $6.7 billion in fiscal 2003 to $7.5 billion in 2005 (fiscal years end July 31). In 2006, the company sold its UK operations for $870 million, and sales fell to $7.3 billion. Sales rose 8.2% to $7.9 billion in 2007....

DIEBOLD INC. $37 (New York symbol DBD; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 65.8 million; Market cap: $2.4 billion; WSSF Rating: Average) fell from $54.50 in July 2007 to $23 in January 2008 due to a dispute with the SEC over the way it recognized revenue from certain ATM sales contracts. The company has now changed its policy, and expects to file updated statements in the second quarter of 2008. The new policy should have little impact on Diebold’s earnings. Meanwhile, strong demand for Diebold’s ATMs in China and India is helping to offset weaker sales in the United States. As well, its new ATMs are faster, interact with more computer systems and cut operating costs. The recent shift of its European ATM manufacturing to a low-cost facility in Hungary should also improve its long-term profits. Diebold’s stock is trading below United Technologies’ $40.00-a-share offer, which suggests a competing offer is unlikely....

UNITED TECHNOLOGIES CORP. $70 (New York symbol UTX; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 980.2 million; Market cap: $68.6 billion; WSSF Rating: Above average) has five main businesses: Carrier makes heating and air conditioning equipment (27% of 2007 revenue, 18% of profit); Otis makes and services elevators (22%, 31%); Pratt & Whitney makes aircraft engines (22%, 27%); Flight Systems makes helicopters and aircraft controls (19%, 18%); and UTC Fire & Security provides security and fire protection services (10%, 6%). The United States government, United’s biggest customer, accounts for 15% of its annual revenue. The company has fueled its growth in the past few years with acquisitions, which is riskier than internal growth. However, United Technologies has a strong history of successfully integrating new businesses, which cuts the risk of the unpleasant surprises that can come with any purchase. Its latest target is Diebold Inc. (see box this page). United Technologies is offering $40.00 a share, or roughly $3 billion in total. To put that in context, it earned $4.27 a share (total $4.2 billion) in 2007, up 15.1% from $3.71 a share ($3.7 billion) in 2006. Revenue grew 15.1%, to $54.8 billion from $47.8 billion....

XEROX CORP. $15 (New York symbol XRX; Conservative Growth Portfolio; Manufacturing & Industry sector; Shares outstanding: 917.6 million; Market cap: $13.8 billion; WSSF Rating: Average) makes copiers, printers, scanners and fax machines. The company also supplies consulting and maintenance services. Overseas markets account for roughly half of its revenue and profits. Xerox has a long history of developing innovative products. It currently spends around 5% of its revenue of $18 a share on research, which it must expense immediately. However, a steady stream of new products have made Xerox the leading supplier of highend publishing equipment in the United States and Europe. The company is focusing its research on color printing technologies, which generate higher profits than traditional black-and-white systems. For example, it recently opened a new $24 million solid ink plant in Oregon. Unlike traditional liquid inks, printing with solid inks produces less waste and requires less electricity....

IDEXX LABORATORIES INC. $48 (Nasdaq symbol IDXX; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 61.0 million; Market cap; $2.9 billion; WSSF Rating: Average) reported that sales grew 24.8% in 2007, to $922.6 million from $739.1 million in 2006. Earnings per share before one-time items rose 18.8%, to $1.58 from $1.33. However, higher sales of low-profit products and services hurt its overall profit margins in 2007. The company has little long-term debt and holds $60.4 million or $0.99 a share in cash. Idexx also increased research spending by 26% in 2007. However, as a percentage of sales, it was unchanged at 7.3%. New products from these outlays should help Idexx expand its share of the veterinary equipment market. But at over 30 times earnings and 3 times sales, Idexx needs substantial growth to justify the current stock price....

BUCKEYE PARTNERS L.P. $46 (New York symbol BPL; Income Portfolio, Utilities sector; Units outstanding: 48.0 million; Market cap: $2.2 billion; WSSF Rating: Average) has sold 2.3 million units to the public at $44.65 each. Buckeye will use the proceeds of $102.7 million to help pay for its recent $145.5 million purchase of Farm & Home Oil Co., a Pennsylvania-based wholesale distributor of home heating oil and gasoline. Buckeye has a long history of growing by acquisition, which adds risk. However, financing new purchases with units helps conserve cash and keeps its debt level down. Buckeye currently pays an annual distribution of $3.35 a unit, which yields 7.3%. These new operations will immediately increase Buckeye’s cash flow, and help it expand its payout....

These three credit rating companies make money by providing investors with information that will help them make better decisions. However, big writedowns of securities backed by subprime mortgages in the past few months have hurt the liquidity of old bonds as well as demand for new bonds. Unexpected writedowns of investment grade securities have also prompted investors to sue the rating agencies. They claim rating providers deliberately over-estimated the quality of certain securities to secure future fee revenue from issuers. As well, governments are now examining the role credit rating agencies played in the recent crisis. Increasing regulation could limit their ability to issue ratings on certain types of securities, and raise costs....

WAL-MART STORES INC. $53 (New York symbol WMT; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 4.0 billion; Market cap: $212.0 billion; WSSF Rating: Above average) plans to improve its image with consumers by using its size to pressure suppliers into cutting down on wasteful packaging. It’s also installing LED lights and solar panels in its stores. Meanwhile, Wal-Mart plans to acquire the remaining 4% of its Japanese subsidiary. This operation is losing money, mainly because Japanese shoppers equate Wal-Mart’s focus on low prices with low quality. Owning 100% of this subsidiary will make it easier to adjust the format to local tastes, and improve its performance. Wal-Mart is a buy.

ARCHER DANIELS MIDLAND CO. $42 (New York symbol ADM; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 643.6 million; Market cap: $27.0 billion; WSSF Rating: Above average) currently accounts for about 15% of the United States’ ethanol production. Fuel companies add ethanol to gasoline to cut harmful emissions. Due to government subsidies, ethanol production has soared in the past two years. However, that has in turn driven ethanol prices down. As well, Archer Daniels needs corn to make ethanol, and rising corn prices have squeezed profit margins. Enthusiasm over ethanol contributed to a 30% gain in the stock in the past six months. However, new government limits on cornbased ethanol subsidies add to Archer Daniels’ risk....

Growing interest in the environment continues to prompt changes in consumer spending habits. Here are five companies with the technology and size to profit from this trend. GENERAL ELECTRIC CO. $37 (New York symbol GE; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 10.0 billion; Market cap: $370.0 billion; WSSF Rating: Above average) is one of the world’s largest industrial corporations. GE’s products include major appliances; lighting products; medical imaging equipment; power generation and delivery products; and aircraft jet engines. It also owns 80% of media company NBC Universal, which operates the NBC television network, Universal Studios and several cable and Internet properties. GE sells a wide range of environmentally friendly consumer products, including low-wattage light bulbs and energy-efficient appliances. It also supplies wind turbines and solar panels to electrical utilities. As well, its expertise with nuclear power plants should help it profit from the construction of new plants around the world. Nuclear plants generate fewer emissions than gas and coalfired plants....