Finance and Energy Lead Top Five Value Stocks

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.

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First up is insurance and financial services company MetLife(MET), which has merited a buy rating since March 2005. With a strong market position and favorable industry trends, the company is positioned for continued strong financial performance.

MetLife has bolstered its market position in the core insurance and annuity business with its acquisition of Travelers Insurance Company and the completion of a distribution agreement with Citigroup(C) in 2005, giving it one of the broadest distribution networks in the sector. Ongoing consolidation within the industry will lead to sustained growth. Risks include changes in interest rates, equity prices and any slowdown of the economy.

As with other insurance and financial services companies, MetLife is vulnerable to any sharp fluctuation in equity markets, a decline in investment spreads, negative competitive effects on premium rates, adverse regulatory developments and any unexpected catastrophic event.

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Financial services firm Prudential(PRU) has been rated a buy since March 2006. The rating is based on favorable industry trends due to positive developments in the employment market coupled with improving corporate confidence, as well as recent acquisitions and joint ventures. The company has seen income growth from continuing operations, and a $3 billion stock repurchase plan is scheduled for fiscal year 2007, which could boost EPS, return on equity and the share price.

The main risks could arise from any sharp fluctuation in equity markets, a decline in investment spreads, negative competitive evens on premium rates, any adverse regulatory developments and unexpected catastrophic events.