SIVY ON STOCKS from CNNmoney.com
November 23, 2001

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Deep value


While you're waiting for the economy to rebound, take a look at some of the
incredibly cheap bargains that are still available.

By Michael Sivy

Investors are hoping the economic recovery will begin by the second quarter
of 2002. But signals are still mixed -- and economists are waiting to see
how strong retail sales are during the all-important holiday season. I
continue to be optimistic about next year's economy. And the overall market
is behaving as though the upturn isn't far off. But we had a false start in
May and June, and there's still no way of being sure that a sustainable
recovery is about to take hold.

The good news amid all this uncertainty is that many stocks have lagged the
recent market pickup -- and they're still selling at extraordinarily low
prices. Sanford C. Bernstein's Strategic Value fund includes a lot of these
bargain-priced issues, which Bernstein calls "deep-value stocks." Here's a
quick look at five stocks that Bernstein has favored this year.

American Electric Power
One of the nation's lowest-cost electricity producers, AEP [AEP] serves
nearly 5 million customers in the middle of the country, from Ohio to
Louisiana. The company is considering a plan to divide regulated and
non-regulated businesses, which could boost the total value of the stock.
Earnings growth is projected at 7 percent annually over the next five
years, and the shares yield 5.7 percent, high even for a utility. At
$42.40, the stock trades at just over 11 times next year's estimated earnings.

Dow Chemical
Now the largest chemical company by revenues (ahead of DuPont), Dow's [DOW]
basic chemical businesses are in the midst of a cyclical earnings decline,
compounded by dilution following February's acquisition of Union Carbide.
Profits should start rebounding in the second half of next year, helped by
an improving economy and post-merger cost cutting. Earnings could grow 9
percent annually over the next five years, and the yield is 3.5 percent. At
$38, the stock trades at 27 times next year's earnings.

Occidental Petroleum
One of the most profitable oil companies on a per-barrel basis, Oxy's [OXY]
earnings have been held back by its chemical operations. Results will be
depressed next year, but should rebound in 2003. The stock is a likely
takeover candidate if the industry consolidates. Earnings could grow 9
percent annually over the next five years, and the yield is 4 percent. At
$24.90, the stock trades at 12.5 times next year's earnings.

Sears
Still one of the largest U.S. retailers, Sears [S] is No.1 in appliances.
The company has emphasized energy-efficient models, which are popular
because of consumers' concerns about high oil and gas prices. Earnings
could grow 9 percent annually over the next five years, and the yield is 2
percent. At $45.10, the stock trades at less than 11 times next year's
earnings.

Washington Mutual
The nation's largest thrift with offices in 42 states, Washington Mutual
[WM] has traditionally been strong in adjustable-rate mortgages. Those ARMs
have recently lost share to fixed-rate loans because long-term interest
rates have been so low. As a result, the share price is now undervalued
relative to other financial companies. Earnings could grow percent 13
annually over the next five years, and the yield is 2.9 percent. At $33.10,
the stock trades at nine times next year's earnings.

###

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