Top Five All-Around Value Stocks
TheStreet.com Ratings Staff
07/17/07 - 12:41 PM EDT
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, all-around-value stocks are in the spotlight. These are stocks of companies that meet a number of criteria, including annual revenue of more than $500 million, lower-than-average valuations such as a price-to-sales ratio of less than 2, and leverage that is less than 49% of total capital.
In addition, they must rank near the top of all stocks rated by our proprietary quantitative model, which looks at more than 60 factors. The stocks must also be followed by at least one financial analyst who posts estimates on the Institutional Brokers' Estimate System. They are ordered by their potential to appreciate.
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.
Rated a buy since March 2005,
Norsk Hydro(NHY Quote) ranks among the world's leading producers of offshore oil and gas. It is also one of the top three integrated aluminum suppliers in the world. The company has shown strong revenue growth and impressive stock price appreciation. Although it has reported somewhat volatile earnings recently, it is poised for EPS growth in the coming year. These strengths outweigh the company's subpar net income growth.
Petrobras-Petroleo Brasileiro(PBR Quote) has had a buy rating since May 2005. The company's strengths include notable revenue growth, a steady pattern of EPS growth over the past two years, improved return on equity and impressive increases in net operating cash flow. Although Petrobras might have a few minor weaknesses, they are unlikely to have a significant impact on results.
Parker-Hannifin(PH Quote), which makes motion and control technologies and systems, has been rated a buy since October 2006. During the third-quarter of fiscal year 2007, the company grew both its revenue and net income because of better sales in most of the segments and posted higher return on equity. There was an improvement in debt-to-equity ratio, which signifies its financial stability. The machinery industry overall is poised to continue the growth it has exhibited over the past few years, which has outpaced that of the overall economy.
Oil refiner
Valero Energy(VLO Quote) has been rated a buy since May 2005. The company displays impressive net income growth and a healthy return on equity and leverage level. It has a solid outlook and a strategic capacity expansion at its Port Arthur refinery, improving overall throughput capacity by 30,000 barrels a day. Among risks to the rating, Valero's performance depends on the future movement of crude oil prices and their impact on sour crude oil discounts. Furthermore, an increase in operating cost is a cause of concern.
Marathon Oil Corporation(MRO Quote) engages in the exploration, refining and transportation of crude oil and petroleum products worldwide and has been rated a buy since June 2005. The company's aggressive capital investment plans and new discoveries, together with a positive industry environment, should help support its growth going forward. Prices for oil and gas are currently well above their historical averages, and this should help the company maintain profitable growth. The strong commodity pricing environment could continue in the near future because of a tight supply-and-demand situation. Refining margins are also at a comparatively high level because of limited refining capacity.
