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Top Five Fast-Growth Stocks

TheStreet.com Ratings Staff

Each weekday, TheStreet.com Ratings compiles a list of the top five stocks in five categories -- fast-growth, all-around value, large-cap, mid-cap and small-cap -- and publishes these lists in the Ratings section of our Web site.

This list, updated daily, is based on data from the close of the previous trading session. Today fast-growth stocks are in the spotlight. These are stocks of companies that are projected to increase revenue and profit by at least 12% in the coming year and rank near the top of all stocks rated by our proprietary quantitative model, which looks at over 60 factors.

In addition, the stocks must be followed by at least one financial analyst who posts estimates on the Institutional Brokers' Estimate System. Please note that definitions of revenue vary by industry, and this screen does not make adjustments for acquisitions, which can materially affect posted results. Likewise, earnings per share growth may be affected by accounting charges, share repurchases and other one-time items.

Note that no provision is made for off-balance-sheet assets such as unrealized appreciation/depreciation of investments, market value of real estate or contingent liabilities that might affect book value. This could be material for some companies with large underfunded pension plans.

Today leads off with Precision CastpartsPCP, which makes complex metal components and products for the aerospace and industrial gas turbine industries. It has been rated buy since June 2005. The company has recently made acquisitions expanding its casting, forging and fastener product offerings, and these should fuel revenue growth.

Precision's net income has also been increasing as a result of margin expansion and higher income from continued operations (which were partially offset by higher interest expense and taxes). Because Precision depends on the aerospace industry for its top-line growth, any slowdown in that industry could lead to reduced demand for its products. Other possible concerns include fluctuations in the prices of basic materials and any unseen difficulty in integrating recent acquisitions.

Russian dairy product and beverage manufacturer Wimm-Bill-Dann FoodsWBD has earned a buy rating since December 2005. The company has shown impressive revenue growth, net income increases and significant growth in return on equity. Its return on equity in the last quarter exceeded that of the same quarter one year ago, a clear sign of strength within the company. These strengths outweigh the stock's premium valuation on the basis of our review of its current price compared with earnings and book value.

HarscoHSC provides industrial services and engineered products to the steel, construction, railways and energy industries. It has been rated a buy since July 2005. The company demonstrates robust revenue growth, notable return on equity, net income growth that has outperformed its industry average and a pattern of positive EPS growth over the past two years. Powered by these strong financial results, Harsco's stock has appreciated by 45.55% in the 12-month period prior to July 13. The growth has put it at a price level that is relatively expensive compared with the rest of its industry, but given the Harsco's strengths, the higher price level is justified.

The company's low profit margins pose no threat to the buy rating at this time.

GarminGRMN, which makes navigation, communications and information devices based on GPS technology, has been rated a buy since July 2005. The company has shown outstanding revenue growth, notable return on equity, a two-year pattern of steady increases in EPS and is carrying no debt. These strengths outweigh the fact that the company is trading at a premium valuation based on TheStreet.com Ratings' review of its current price compared to factors such as earnings and book value.

Triumph GroupTGI, an aircraft-components company, has maintained a buy rating since August 2005. The company has demonstrated impressive growth in revenue, net income and earnings per share, along with good cash flow from operations. The company has shown a pattern of positive EPS growth over the past two years, a trend TheStreet.com Ratings team believes will continue in the coming year. Triumph also has impressive net operating cash flow. These strengths outweigh its low profit margins.