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As editor of http://www.morningstar.com/Products/Store_StocksMGI.html and manager of the Growth Portfolio, I rely on Morningstar’s equity analysts to bring their best ideas to my attention. Morningstar’s 1,900-stock coverage universe is divided into industry groups. I recently asked our industrials analysts, who are responsible for sectors ranging from airlines to defense contractors, one question: What company on your coverage list would you most like to own if it was available at the right price? (Of course, Morningstar analysts are prohibited from owning an interest in the stocks they cover, so this question is purely hypothetical.)

Adam Fleck
Mine would have to be http://quicktake.morningstar.com/StockNet/MorningstarAnalysis.aspx?Country=USA&Symbol=PAC http://quote.morningstar.com/Switch.html?ticker=PAC . It’s one of three publicly traded Mexican-airport operators (and has a wide moat like the others), but is the only one with an average risk rating (versus above-average ratings for the others). Much like http://quicktake.morningstar.com/StockNet/MorningstarAnalysis.aspx?Country=USA&Symbol=ASR http://quote.morningstar.com/Switch.html?ticker=ASR and Grupo Aeroportuario Centro Norte http://quote.morningstar.com/Switch.html?ticker=OMAB , Pacifico operates its airports in local monopolies and is free to manage its unregulated commercial revenue. Pacifico operates six of Mexico’s 10 busiest airports, and its domestic/international passenger levels are more evenly split (61% domestic, 39% international) than those of either ASR or OMAB. As a result, both the influx of low-cost carriers and the U.S.-Mexico bilateral flying agreement strongly benefit Pacifico.

Chris Lozier
http://quicktake.morningstar.com/StockNet/MorningstarAnalysis.aspx?Country=USA&Symbol=GD http://quote.morningstar.com/Switch.html?ticker=GD gets more out of its people and its assets than any other defense contractor. It was the first to break the mold of “large government contractor = pseudo-governmental agency” in which inefficiencies are gross and employees punch out precisely at 5 o’clock, and it has maintained a sizable lead in its ability to generate economic profits. In fact, we only recently awarded our second wide moat to a defense contractor, http://quicktake.morningstar.com/StockNet/MorningstarAnalysis.aspx?Country=USA&Symbol=LMT http://quote.morningstar.com/Switch.html?ticker=LMT . And while Lockheed is generating enormous wealth for its shareholders, it’s still not quite able to deliver the same returns on invested capital as General Dynamics.

Ben Johnson
I like to think of http://quicktake.morningstar.com/StockNet/MorningstarAnalysis.aspx?Country=USA&Symbol=ECL http://quote.morningstar.com/Switch.html?ticker=ECL as the http://quicktake.morningstar.com/StockNet/MorningstarAnalysis.aspx?Country=USA&Symbol=CTAS http://quote.morningstar.com/Switch.html?ticker=CTAS of soap. The firm has a large distribution network through which it provides a slew of cleaning and sanitizing products and services to major restaurant chains, hotel chains, hospitals, and retail outlets. It is the sole player in this space with sufficient scale to serve its customers on a global basis. It is also now the only large player to have a direct distribution model, as its next largest competitor, Johnson Diversey, withdrew from the direct-distribution market in mid-2006.

Brian Nelson
http://quicktake.morningstar.com/StockNet/MorningstarAnalysis.aspx?Country=USA&Symbol=PCP http://quote.morningstar.com/Switch.html?ticker=PCP would be the one. Aircraft orders remain robust, with Precision executing nicely. Its recent acquisition of SMC continues to outperform expectations, with operating margins in the division now expected to rise to 20% by fiscal 2008 from the midsingle-digit range when the acquisition was announced in August 2005 (it closed in May 2006). The 20% level would be above companywide operating margins, which are in the high teens, so this is impressive.

Marisa Thompson
http://quicktake.morningstar.com/StockNet/MorningstarAnalysis.aspx?Country=USA&Symbol=COL http://quote.morningstar.com/Switch.html?ticker=COL makes avionics suites that span the gamut of platforms, including military helicopters, fighter planes, Boeing commercial planes, regional jets, and even business jets. The firms incumbent status as the electronics provider of choice gives it an advantage over competitors as plane manufacturers and pilots are loath to switch based on the costs and training involved. Rockwell is continuing to extend its advantage by investing in next-generation solutions, and some of this research and development is supported by the government, which commissions the firm to produce sophisticated military avionics.

Once Rockwell has developed a system for military use, it leverages that technological expertise to build similar commercial systems. In addition, the firms products are often used by competing aircraft manufacturers so Rockwell is often agnostic in regard to shifts in market share, benefiting from the long-term growth in overall air travel. Returns on invested capital, averaging more than 16% the last six fiscal years, well exceed Rockwells cost of capital, and the firm is a cash-generating machine, with free cash-flow yields in the 10%-13% range.

Scott Burns
http://quicktake.morningstar.com/StockNet/MorningstarAnalysis.aspx?Country=USA&Symbol=CRS http://quote.morningstar.com/Switch.html?ticker=CRS is great little niche player in the fast growing specialty metals sector. The company has exposure to the aerospace, energy and health-care markets; all are expected to be highfliers over the next 5-7 years, and it has been raising prices seemingly at will over the past few years. Over the past three years, operating income has grown annually by 150% on average, and although we expect that growth to slow, we still expect pretty strong performance.

Matthew Warren
The longer I cover the aggregate guys, the more impressed I am by http://quicktake.morningstar.com/stocknet/MorningstarAnalysis.aspx?Country=USA&sktab=analysis&Symbol=VMC http://quote.morningstar.com/Switch.html?ticker=VMC business model. Half of sales go to government-supported infrastructure. One fourth is residential construction and one fourth is nonresidential construction. There is a high-fixed-cost portion of the business that helps on the upside. Even when volumes are down year over year, pricing is very rational due to local oligopolies. Pricing has been absolutely tremendous over the past three years, and yet the cost of stone is still a very small portion of total construction costs. There are no economically viable substitutes.

Aggregate firms find land on the outskirts of a city, feed construction projects with stone as the building comes toward the quarry, and sell the real estate for very nice profits after they’re done mining and have filled the quarry with water. Stone is too inexpensive relative to weight to support much in the way of overseas imports. U.S. infrastructure is dated and crimping the economy in many areas, and funds are starting to flow to fix this problem, especially in California, which benefits Vulcan. Until we invent mass-market hovercraft, the moats around these companies will last for a long time.

No matter what age you are now, you probably think about Social Security benefits as they relate to your retirement planning. If you are younger, you may choose to run retirement projections with reduced or no benefits. For those of you who are middle-age to retirement-age, Social Security will probably be a piece of your retirement picture.

Lots of questions arise about Social Security as individuals go through many of life’s changes including divorce, phasing into retirement, or dealing with the death of a spouse. Use these tips and traps to educate yourself about your options.

Tips
–When you get your annual estimate of Social Security benefits, check to make sure your earnings history is accurate. Everyone age 25 and older should be receiving an annual statement. If you suspect something is wrong, contact your local Social Security office to correct any inaccuracies.

–If both spouses work, each is entitled to a benefit based on his or her own earnings history. However, the spouse with lower benefits is entitled to the greater of 50% of his or her spouse’s benefit or his or her own benefit.

–If you did an analysis showing thattaking lower benefits at age 62 broke even with waiting to take higher benefits at age 65,that break-even agewould be approximately78. So, if you think you’ll live past age 78, you may want to wait until full retirement age to start taking benefits. Of course, no one knows just how long they’ll live, so look at your family health history and your own health situation to make a realistic guess.

–You can choose direct deposits at your bank for your Social Security benefits and never have to worry about a check getting lost in the mail.

–If your spouse has a pension from his or her former employer that will pay over his or her life only, delay taking Social Security so you’ll get the maximum benefit for your own lifetime.

–If you are divorced and your ex-spouse has remarried, both you and the new spouse can collect benefits based on the ex-spouse’s earnings history provided you were married at least 10 years and you apply for benefits after age 62.

–If you are still working late in life, delay taking benefits until age 70. Social Security will pay a premium above the full benefit if you wait until age 70 to take benefits. http://news.morningstar.com/pdfs/SocSecTables.pdf to see “The Impact of When You Start Taking Benefits.”

–If you are a widow or widower, you can start taking Social Security benefits as early as age 60. But you may want to consider starting them later so that you’ll get a larger benefit.

Traps
–Even though Medicare starts at age 65 (assuming you’re eligible), full Social Security benefits start later for those people born after 1938. http://news.morningstar.com/pdfs/SocSecTables.pdf to see “Age Requirements for Full Benefits.”

–If you choose to wait to take benefits until after age 65, don’t forget to apply for Medicare about three months before you turn age 65.

–Not everyone is eligible for Social Security benefits. You need to have 40 credits. You can earn four credits a year, so basically you have to have your own earnings history for 10 years, although it doesn’t have to be consecutive years.

–If your income is more than $25,000 single (or $32,000 married filing jointly) and you’re receiving Social Security benefits, you’ll pay income tax on 50% of your Social Security benefits. However, if your income is more than $34,000 single (or $44,000 married filing jointly), you may have to pay income tax on 85% of your benefit. Seehttp://www.irs.gov/pub/irs-pdf/p915.pdffor more on how to calculate the tax on your benefits.

–If you take Social Security early at age 62, you’ll not only limit your own benefit, but those of your spouse, too (assuming both of you are eligible using one spouse’s earnings history).

–If you are working, are younger than full retirement age, are earning more than $12,960 (2007), and are taking Social Security benefits, you’ll actually lose $1 for every $2 you earn above $12,960. In the year when you reach your full retirement age, you’ll lose $1 for every $3 you earn above $34,440 (2007). At full retirement age, you can work and not lose any of your benefits (although if you keep working to age 70, you’ll get even higher benefits).

–If you are divorced and receiving benefits based on your ex-spouse’s earnings history, your benefits stop if you remarry.

–If you go to prison, your benefits stop (although your dependents can collect their benefits).

–You can continue to collect Social Security benefits even if you retire abroad unless you live in Cuba or North Korea. You may also not be able to receive benefits if you are in Cambodia, Vietnam, or countries from the former Soviet Union (although some exceptions may apply).

Social Security was never intended to cover all of your retirement needs. But it can play an important role in your retirement income, and it’s to your benefit to understand the rules.

A version of this article appeared on October 19, 2006.

The following article originally appeared in http://www.kiplinger.com/. Trailing return figures have been updated through May 31, 2007.

When I look for undiscovered funds, I’m usually looking for funds with experienced managers who have great track records but who haven’t attracted a lot of assets for one reason or another. However, I also like to look for young managers who appear to be rising stars. Funds with promising young managers have the same potential as emerging-growth stocks in that they could provide great returns for a long time (but you don’t want to bet your whole nest egg on them). If you’re really cautious, simply put them on your watch list.

Young Lions
Cory Gilchrist runs http://quicktake.morningstar.com/FundNet/MorningstarAnalysis.aspx?Symbol=MXXIX http://quote.morningstar.com/Switch.html?ticker=MXXIX in the patented Marsico style, blending top-down themes with bottom-up growth-stock picking. The key difference with this fund is that Gilchrist targets companies of all sizes, whereas founder Tom Marsico’s funds focus on big companies. Gilchrist, 36, has been at the helm for four years–four great years, I should add. The fund has outstanding three- and five-year records, thanks to the efforts of Gilchrist and his predecessor, so this fund’s $1.8-billion asset base may well be in the $5-billion range before you know it–his kind of numbers will draw a crowd. You may want to get there first. The fund returned an annualized 19.7% for the three years to May 31, versus 13.0% for Standard & Poor’s 500-stock index.

Donald Kilbride, who manages http://quicktake.morningstar.com/FundNet/MorningstarAnalysis.aspx?Symbol=VDIGX http://quote.morningstar.com/Switch.html?ticker=VDIGX , is a rising star at a rising fund. Although Kilbride has been at the helm for only a year, there’s a lot to like here. Kilbride, 42, hails from asset manager Wellington–a firm with a deep bench and a great record with Vanguard funds, including http://quicktake.morningstar.com/fundnet/MorningstarAnalysis.aspx?Country=USA&Symbol=VWNDX http://quote.morningstar.com/Switch.html?ticker=VWNDX , http://quicktake.morningstar.com/fundnet/MorningstarAnalysis.aspx?Country=USA&Symbol=VWELX http://quote.morningstar.com/Switch.html?ticker=VWELX , and http://quicktake.morningstar.com/fundnet/MorningstarAnalysis.aspx?Country=USA&Symbol=VGHCX http://quote.morningstar.com/Switch.html?ticker=VGHCX . In fact, Kilbride assisted on the Wellington fund before taking the reins at Dividend Growth. Because Dividend switched from a utilities focus to a broad dividend mandate, its past record looks weak, as reflected by its 2-star rating. However, Kilbride’s focus on finding good values among dividend-paying stocks fits well with the fund’s tiny 0.38% expense ratio. Look for it to generate healthy income and nice returns. The fund returned 24.2% for the 12 months to May 31(versus the S&P 500’s 22.8%).

Darren Maupin, 30, took over http://quicktake.morningstar.com/FundNet/MorningstarAnalysis.aspx?Symbol=FIVFX http://quote.morningstar.com/Switch.html?ticker=FIVFX in 2006 after working as an analyst for about eight years. Maupin is a breath of fresh air at Fidelity, where most managers trade rapidly and hold hundreds of stocks. He runs a focused portfolio with a disciplined value strategy that concentrates on companies with clean balance sheets and strong cash flow. He lets cash levels build when he can’t find good stocks. In short, he sounds much more like a Warren Buffett than a Peter Lynch or a Will Danoff. Sounding like Buffett isn’t the same thing as producing returns like Buffett, but Maupin is one to watch.

Minyoung Sohn has run http://quicktake.morningstar.com/FundNet/MorningstarAnalysis.aspx?Symbol=JAEIX http://quote.morningstar.com/Switch.html?ticker=JAEIX for two years and http://quicktake.morningstar.com/fundnet/MorningstarAnalysis.aspx?Country=USA&Symbol=JAGIX http://quote.morningstar.com/Switch.html?ticker=JAGIX for three years. He served as an analyst at Janus for six years before that. I prefer Fundamental Equity as an expression of Sohn’s focus on growth at a reasonable price. He looks for companies with strong, sustainable cash flow and a catalyst for future growth. Compared with some of the better-known Janus fund managers–Scott Schoelzel at http://quicktake.morningstar.com/fundnet/MorningstarAnalysis.aspx?Country=USA&Symbol=JAVLX http://quote.morningstar.com/Switch.html?ticker=JAVLX , for instance–Sohn is more valuation-conscious. You’ll see a few growth darlings but mostly stocks like http://quicktake.morningstar.com/stocknet/MorningstarAnalysis.aspx?Country=USA&sktab=analysis&Symbol=JPM http://quote.morningstar.com/Switch.html?ticker=JPM and http://quicktake.morningstar.com/stocknet/MorningstarAnalysis.aspx?Country=USA&sktab=analysis&Symbol=ge http://quote.morningstar.com/Switch.html?ticker=GE . Sohn, 31, is considered a comer at Janus. He has been getting his feet wet at Fundamental Equity–its return over his two years with the fund is well ahead of that of the S&P 500. With this experience, plus three years at Growth & Income under his belt, he should be ready for great things.

Gilchrist and Kilbride at Fund Conference
By the way, for those attending our http://corporate.morningstar.com/US/asp/subject.aspx?filter=PR4227&xmlfile=174.xml in June, Cory Gilchrist and Donald Kilbride will be on a rising stars panel. Hope to see you there.