TheStreet.com Ratings: Top 10 All-Around Value Stocks
Every day, TheStreet.com Ratings compiles a list of the top 10 stocks in five categories -- fast-growth, all-around value, large-cap, mid-cap and small-cap -- and publishes these lists on the Ratings section of our Web site.
The rankings are based on our ratings, which assess risk-adjusted returns, as well as other criteria specific to the type of stock.
We update the lists at the end of the business day based on information available at the close of the previous trading session. Beginning this week, we are publishing a daily article that takes a closer look at the ratings of the stocks on one of the lists.
Today we start with all-around value stocks. These stocks are in the top 50% of all stocks rated by our proprietary quantitative model, which looks at more than 62 factors. Other selection criteria for this particular category include annual revenue of at least $500 million; lower-than-average valuation, such as a price-to-sales ratio of less than 2; and leverage that is less than 49% of total capital.First on the list is Chevron (CVX), which has been rated a buy since August 2004. One of the so-called super-major integrated oil companies, it has benefitted from strong global demand that keeps oil prices high, as well as from increases in its own exploration activity. The company's robust cash flow facilitates share buybacks and dividend hikes. On the negative side, civil unrest in Nigeria and Venezuela could hurt Chevron's production and affect the company's growth.
Insurance and financial services company MetLife (MET) has merited a buy rating since December 2004. With a strong market position and growing international operations, the company is poised for strong financial performance. MetLife has bolstered its market position in the core insurance and annuity business with its acquisition of TIC. It now has one of the broadest distribution networks in the sector. Growth is expected through ongoing consolidation within the industry. The risks to the buy rating include the negative impact of any changes in interest rates, equity prices and any slowdown of the economy.
Hewlett-Packard (HPQ) has been rated a buy since November 2004. This computer manufacturer's positives include robust top-line growth due to strong demand for its products, focused cost-cutting initiatives and improving profitability. Its strategy of acquiring businesses that complement its core operations is also commendable. However, the optimism is tempered by the intense competition in the desktop, laptop and printer markets from Dell (DELL) and Lexmark (LXK). This pressures H-P to cut costs.
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