Lance, Pegasystems, Monro: 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, restrained by a higher share count. Revenue grew 11% to $237 million. Its gross margin jumped from 41% to 44% and its operating margin rose 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 14% in 2009, beating the Dow Jones Industrial Average, but underperforming the 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 2.5% dividend yield.

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

The numbers: Second-quarter net income surged 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 grew from 5% to 18%. Pegasystems has outstanding liquidity, evident in its quick ratio of 3.9, and no debt.

The stock: Pegasystems has rocketed 165% this year, easily beating major U.S. indices. The stock trades at a price-to-earnings ratio of 49, a premium to the market and application-software peers. The shares pay a 0.4% dividend yield.