Lance, Rollins, Pegasystems: Top 5 Stocks

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BOSTON (TheStreet) -- The following mid-cap companies have market values between $500 million and $10 billion and receive "buy" ratings from our proprietary quantitative model, which considers more than 60 factors. They're ordered by their potential to appreciate, starting with the company with the best growth prospects.

Lance(LNCE Quote) makes snack foods, including Cape Cod Potato Chips and Archway Cookies.

The numbers: Second-quarter net income surged 252% to $9.5 million as earnings per share grew 233% to 30 cents. Revenue rose 11% to $237 million. Its gross margin jumped from 41% to 44% and its operating margin widened from 3% to 7%. A quick ratio of 1.1 indicates adequate liquidity and a debt-to-equity ratio of 0.4 demonstrates restrained leverage.

The stock: Lance has advanced 15% in 2009, beating the Dow Jones Industrial Average and S&P 500 Index. The stock trades at a price-to-earnings ratio of 28, a premium to the market, but a discount to packaged-food peers. The shares pay a 2.4% dividend yield.

Pegasystems(PEGA Quote) sells software to automate business processes.

The numbers: Second-quarter net income soared 294% to $11 million and earnings per share increased 275% to 30 cents. Revenue rose 25% to $64 million. Its gross margin advanced from 59% to 66% and its operating margin stretched from 5% to 18%. Pegasystems has an outstanding liquidity position, evident in its quick ratio of 3.9, and has no debt or interest expenses.

The stock: Pegasystems has rocketed 150% this year, beating major U.S. indices. The stock trades at a price-to-earnings ratio of 47, a premium to the market and application-software peers. The shares pay a dividend yield of less than 1%.