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The events of 9-11 have caused havoc for corporate earnings projections. Many companies will be reporting soft earnings. That is where you do not want to be.

You want to own stocks that are going to be reporting upside surprises in the coming months. There will not be many, but here are a few we think can deliver:

Tetra-Tech (Nasdaq: TTEK) – This company is going to be heavily involved in bringing Uncle Sam up to speed in the area of bio-terrorism. Most of the hot-spots from the anthrax scare are being cleaned-up and secured by the pros from Tetra-Tech. We are behind the curve right now in the bio-terrorism protection area, and TTEK will reap profits from this fact.

Right now, the earnings estimate for TTEK in 2002 is $1.33 a share. We think earnings will be at least 10 to 15 cents higher than that.

Tetra-Tech is a bargain below the $27 area.

American International Group (NYSE: AIG) – This A+ rated insurance company is stronger than ever, 9-11 events included. Already in the works are expansion plans for a new re-insurance company. One important thing to remember about AIG is they are well spread out all over the globe. More than half of AIG’s earnings come from outside the USA.

Earnings estimates for 2002 are $3.50. We think that is too low. Insurance premiums are skyrocketing, and there is no one in the insurance business better prepared than AIG.

The combination of AIG’s strong balance sheet, their global reach and a management team that is on the ball, all point to this stock outperforming the markets in the coming months. Lower interest rates also favor AIG.

Below $80 is a bargain, a proven one-decision stock.

Williams Cos. (NYSE: WMB) – Even though oil prices have dropped a good bit, natural-gas prices have remained in the $2.50 to $3.00 area. At this price WMB makes a lot of money. Another important point not to be missed is that the unfolding debacle at Enron (NYSE: ENE) is very much a plus for WMB.

We have followed Williams Cos. for many years, and we believe the management team is superior. Williams has long been number two to Enron’s sexy act. But, in light of the exposure of questionable business tactics at Enron (along with the stock price tanking 90 percent this year!), the pristine act at Williams is looking pretty good these days.

While the street is expecting Williams to earn $2.70 in 2002 we are guessing they may beat that number by 20 to 30 cents. If natural gas prices rise from here, it could be even better.

Below $30, we think Williams is a bargain. It is also a promising stock for those looking for a long-term yield play. We expect the WMB dividend to grow impressively in the next 10 years.

Alliant Techsystems – This company makes bullets, bombs, and all sorts of munitions for fighting. In light of the recent times, we see business orders being very strong the next 2 to 4 years.

You can bet your bottom dollar that our defense costs are going to balloon in the next five years. The White House wants half of the emergency $40 billion for 9-11 to go to the Pentagon. The Democrats (ever the bulls on defense spending, er, well, that is post 9-11 anyway!) are suggesting another quick $20 billion.

And get this … a wire service ran a story this week suggesting the Afghan War will cost an extra $1 billion a month. We should be so lucky. How about three or four times that? That sounds more realistic. Right now our “War-Machine” is so rusty, we can’t even mount one-third of the daily sorties we did in the 78-day air-war in Kosovo.

So, a company like Alliant Techsystems is going to be very busy in the next few years. Earnings estimates for year 2002 for ATK are $3.60. They could easily earn $1.00 a share more than that, and 2003 should be pretty good too.

Exxon (NYSE: XOM) and Imperial Oil (AMEX: IMO) – both of these companies operate numerous service stations. The recent drop in oil prices is going to make these companies a lot of money at the pump, not to mention in the chemical area. XOM is going to be going to Asia and Russia in a big way in the coming years. IMO (XOM owns 70 percent of IMO) is blessed with a plethora of promising production probabilities, maybe the most promising energy stock of them all, especially if you are looking for dividend growth in the coming years.

Below $40, Exxon is a bargain – ditto for Imperial below $28.

Bottom Line: For the most part the current investment environment will favor the big and strong who operate in basic industries. XOM, IMO, TTEK, AIG, WMB, and ATK all come to mind as beneficiaries of the times we live in.

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