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Kathy Panagopouloskathy.panagopoulos@morningstar.com
Morningstar Issues Year in Review Stock Report: Market Value Creators and Destroyers

CHICAGO, Dec 19, 2002 – Morningstar released its annual Year in Review profile on Morningstar.com today, with a special report titled, "Market Value Creators and Destroyers." According to the report, the worst performer of the year, General Electric (GE), lost $140 billion of its market value, which is nearly double the $75 billion gain of the top 10-performing stocks combined. 

"It's apparent that a tremendous amount of shareholder wealth was lost this year, and that no sector escaped the bear," said Pat Dorsey, director of stock analysis at Morningstar. "Investors need to remember that it's important to hold onto good, core stocks even if they decreased in value during the year. And, even if a stock's price loses value, it still might be overvalued." 

The tables below show the 10 stocks that gained and lost the most as measured by their change in market capitalization, or the total dollar value of their outstanding shares.

 Stocks with the Largest Gains in Market Value

Market Cap
as of 12-17-02
( $ Bil )

Market Cap
as of 12-31-01
( $ Bil )
Change
in %
Change
in $
Procter & Gamble PG
113.56
102.52
10.76
11.04
United Parcel Service B UPS
71.38
61.44
16.17
9.94
Kraft Foods KFT
68.57
59.04
16.13
9.53
Boston Scientific BSX
17.36
9.73
78.46
7.63
Nippon Telegraph & Telephone NTT
59.63
52.28
14.07
7.36
Wachovia WB
49.78
42.68
16.63
7.10
Washington Mutual WM
35.46
28.64
23.79
6.81
Newmont Mining NEM
9.76
3.75
160.58
6.02
Nissan Motor NSANY
19.61
13.65
43.74
5.97
Wells Fargo WFC
79.52
74.15
7.24
5.37

 

 Stocks with the Largest Losses in Market Value

Market Cap
as of 12-12-02
( $ Bil )

Market Cap
as of 12-31-01
( $ Bil )
Change
in %
Change
in $
General Electric GE
258.73
397.89
-34.98
-139.16
Intel INTC 
118.52
211.09
-43.85
-92.57
Tyco International TYC
33.62
117.58
-71.40
-83.96
AOL Time Warner AOL
58.08
136.60
-57.48
-78.52
IBM IBM
135.73
208.37
-34.86
-72.64
Citigroup C 
187.76
253.72
-26.00
-65.96
Microsoft MSFT 
292.39
356.91
-18.08
-64.53
Pfizer PFE
187.82
251.56
-25.34
-63.74
Home Depot HD
60.55
119.32
-49.26
-58.77
Bristol-Myers Squibb BMY
46.74
98.68
-52.63
-51.94

How a Few Bad Seeds Affect the Whole Bunch 
The market decline may have hit technology and telecom companies first, but the top 10 market capitalization losers represent a broad cross section of the market, including: media, industrial conglomerates, computer hardware and software, and retail. 

The companies that have shown the largest gains in value are not as diverse, representing such industries as consumer products, health care, and financial services. The three companies that created the most market value for shareholders during 2002--Procter & Gamble (PG), United Parcel Service (UPS), and Kraft Foods (KFT)--have pursued steady growth strategies and are led by shareholder-committed CEOs. These companies provide basic goods or services people and corporations need, even during a recession. 

For those looking to take advantage of stocks that are undervalued, the bottom 10 may be a good place to bargain hunt, says Morningstar. The price declines have been excessive for some of the biggest value destroyers, including Home Depot (HD) and Pfizer (PFE). Morningstar believes that both stocks have fallen to the point that they are trading below their fair value. 

"With the new year approaching, it's a good time to do some portfolio housekeeping," Dorsey said. "We see good opportunities to pick up some undervalued stocks that would be great additions to a diversified portfolio."

Other Market News
The markets took another beating this year. The Morningstar U.S. Market Index fell 21 percent year to date, with growth stocks hit hardest of all. With less than two weeks of trading remaining in 2002, the S&P 500 Index is also down 21 percent for the year, and the Dow Jones Industrial Average is down 15 percent.

"If the current market holds, 2002 will complete a hat trick of three losing years for the major market indexes--the first time this will have occurred since the period from 1939 to 1941," Dorsey said.

The good news is that returns for the fourth quarter are in the black for major stock indexes. The Morningstar U.S. Market Index posted a gain of 9 percent through Dec. 18, 2002. The S&P 500 has posted nearly a 10 percent gain thus far in the fourth quarter. The Dow Jones Industrial Average bounced back in the fourth quarter and was up 11 percent through Dec. 18.

For the most current data on more than 13,000 funds and 7,000 stocks, and more insight on what the year's market news means for investors, go to Morningstar's 2002 Year in Review section:
http://news.morningstar.com/QtrEnd/CoverQ402.html

About Morningstar
Morningstar, Inc. is a global investment research firm, offering an extensive line of print, software, and Internet-based products and services for individuals, financial advisors, institutions, and the media.

Editor's Note: If you are interested in receiving weekly, monthly, and quarterly e-mails on stock and mutual fund data, contact: Annette Larson, Morningstar Media Relations, annette.larson@morningstar.com. Preliminary year-end data will be distributed Thursday, Jan. 2, 2003.

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