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Top Five Fast-Growth Stocks

TheStreet.com Ratings Staff

Each business day, 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 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 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.

BlackRock (BLK Quote), a publicly owned investment manager, has been rated buy since December 2005. Its products include a variety of fixed income, cash management, equity and alternative investment separate accounts and mutual funds.

The company is reaping substantial benefits from its September 2006 merger with Merrill Lynch Investment Managers (MLIM) and the October 2007 acquisition of the fund of funds business of Quellos Group, LLC, which have allowed it to become one of the world's largest asset management firms. The beneficial impact of these business combinations is reflected in the firm's cross-selling successes, which supported its top-line growth throughout fiscal 2007.

The company reported robust results for fiscal 2007 on Jan. 17. Assets under management were up 21% compared with to the end of 2006, standing at $1.36 billion as of the end of the year. Along with the acquisition of the Quellos business, this helped drive revenue growth of 42% for the quarter and 131% for the year. The firm continues to focus on product diversification and has mitigated damage stemming from turmoil in the credit markets by adopting stricter risk-management procedures. Management feels that this focus will enable it to grow despite current challenging market conditions.

Our rating is subject to the risk of any unexpected downturn in the securities markets or the economy in general, any deterioration in relative investment performance and any adverse regulatory developments. Furthermore, slowing trends in the U.S. economy and fluctuations in interest rates could adversely affect the company's performance.

CAM Commerce (CADA Quote) provides a variety of software, hardware, and other technical systems for retailers. Our buy rating, in place since February 2006, is based on positive investment measures such as the company's strong revenue growth, solid financial position and stock performance, and its growth in net income.

Powered by earnings growth of 70% during the first quarter of 2008, this stock has surged 64% over the past year. For the first quarter, the company posted a year-over-year revenue increase of 37%. CAM Commerce has no debt to speak of, giving it a debt-to-equity ratio of zero, which we consider a relatively favorable sign. Net income increased 75% year over year.

Finally, the company has demonstrated an impressive pattern of positive earnings-per-share growth over the past two years. EPS grew 70% in the first quarter of 2008. Looking forward, we feel that this trend should continue.

DeVry (DV Quote) is an international higher education company that owns and operates DeVry University, Ross University and Becker Professional Review. It has been rated a buy since January 2007.

DeVry's strengths include impressive EPS growth, compelling improvement in net income and largely solid financial position. For the second quarter of 2008, DeVry reported EPS of 49 cents, compared with 23 cents a year ago. This increase is part of a demonstrated pattern of EPS growth over the past two years, a trend that should continue. Second-quarter net income of $35.8 million represents a year-over-year increase of 118%. DeVry has no debt to speak of.

Powered by strong earnings growth of 113%, this stock has surged 63% over the past year. While the stock is somewhat expensive compared to the rest of its industry, we feel that DeVry's strengths justify the premium.

Amedisys (AMED Quote) provides home health and hospice services in the southern and southeastern U.S. The company provides a wide variety of health care services, including skilled monitoring by registered nurses, occupational and physical therapy, assessments, and patient education.

We have rated Amedisys buy since January 2005. Amedisys also has a strong liquidity level and low leverage. For the third quarter of 2007, the company's cash and cash equivalents grew sevenfold to $72.5 million, while its debt-to-equity ratio improved significantly to 0.06 from 0.21 a year ago.

Amedisys has a strong outlook thanks to recent acquisitions. During the third quarter, the company acquired IntegriCare to strengthen its Home Health and Hospice Care service segments. Bear in mind, however, that the company's revenue and earnings could be affected by any adverse changes in Medicare rates and reimbursement methodologies or any challenges related to the integrations of the recent acquisitions.

Atwood Oceanics (ATW Quote) is a Houston-based international drilling contractor, engaging in the offshore drilling and completion of exploratory and developmental oil and gas wells worldwide.

We have rated this company buy since September 2004 based on revenue growth, a solid financial position, increasing EPS and solid stock performance. Revenue rose 49% in the fourth quarter of 2007 to $121.6 million. Atwood's debt-to-equity ratio is very low at 0.03, implying very successful management of debt levels. During the past fiscal year, the company increased its bottom line to $4.37 a share, vs. $2.75 a share a year ago. The company has demonstrated a pattern of positive EPS growth over the past two years. Finally, the stock has surged 72% over the past year, powered by earnings growth of 128%.

Although almost any stock can fall in a broad market decline, Atwood should continue to move higher. Risks to the rating include pricing fluctuations in the oil and gas industry, the company's ability to secure adequate financing, governmental regulation and environmental matters.

Our quantitative rating is based on a variety of historical fundamental and pricing data and represents our opinion of a stock's risk-adjusted performance relative to other stocks.

However, the rating does not incorporate all of the factors that can alter a stock's performance. For example, it doesn't always factor in recent corporate or industry events that could affect the stock price, nor does it include recent technology developments and competitive dynamics that may affect the company.

For those reasons, we believe that a rating alone cannot tell the whole story and that it should be part of an investor's overall research.