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No. of Recommendations: 3
This is year four of my end of year exercise to identify what I believe are my top 10 holdings for the coming year. These are the 10 stocks that I already have in my portfolio, that for one reason or another I feel have the best chance of doing well in the next year or so. These are all, of course, only my opinion, and I'd hate for anyone to invest in these, lose their money and blame me. So don't even think of investing in these without doing your own research. Targets are my naive idea of what I think is fair value for each of these.

1) GM - The price has come down enough to make GM attractive to me despite the uncertainty regarding pension obligations. GM continues to generate around $5-7 of earnings a year and pay a $2 annual dividend. Not bad for a $40 stock. Target modestly raised to $80.

2) FRE - Freddie Mac had a pretty good year. Still pretty attractively priced, considering the historic strong growth and decent dividend. They've been under close scrutiny for the last couple of years and legislative changes are likely in the not too distant future. They are still a little behind in getting their financials out. Hopefully that will be fully resolved this year. Target reduced to $100.

3) MRK - Merck has had quite a string of unfortunate events, the whopper being Vioxx. Methinks the market over-reacted and the stock already appears to be turning around a bit. Priced attractively based on p/b and p/e compared with historical and rest of industry. Good dividend yield. Target reduced to $70.

4) NTBK - I still like Netbank, but I'm getting just a little concerned. Their business model seems to have changed a little in the last couple of years along with some management changes. Interest rate changes have not been kind to Netbank. It looks like earnings may be depressed the next couple of years. Still at just a little over book value, this would seem to be at least a reasonably conservative investment. Target reduced to $20.

5) BBOX - Aggressive Stock buybacks mean each share becoming a larger part of the company. Keep an eye on margins. Revenue decline is a concern, but newest acquisition should increase revenues significantly. Target increased to $75.

6) SBC - I'm a little concerned about the outlook, but SBC still seems like a solid pick with a good dividend. Hopefully earnings will pick up again in the next couple of years. Target stays the same at $50.

7) LTD - Despite good performance in 2004, I think LTD could still go higher and it stays on the list. Big stock buybacks and special dividend this past year. The second dutch tender went for around $29.00, so the company would appear to feel it's worth at least that much. Target increased to $35.

8) KO - New on the list this year. While perhaps not great fundamentals, KO has a great moat and pays a pretty decent dividend. It's been trending down for years. I think it's due to turn around. Target of $80.

9) BKR - Baker is once again showing nice profits and the projections look good. It may have gotten a little ahead of itself and I am concerned that they always seem to find a way to trip every few years. Still attractive p/e. Target of $25.

10) BMY - New on the list this year. Pharma, in general, seems to be a good value right now and BMY is no exception. Nice p/e and yield. Target of $45.

Gone from last year's list are BIIB, which had a good increase and I've sold and WM & MSFT, which I still hold but have been displaced by other stocks on this list. Honorable mentions include BOSA and MDT, which both nearly made the list.
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