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Top Five Fast-Growth Stocks

03/03/08 - 06:50 AM EST

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 - Cramer's Take - Stockpickr), 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, with assets under management up 21% compared 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 adopted stricter risk management procedures to mitigate damage stemming from turmoil in the credit markets. Management feels that this focus will enable the company 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 US economy and fluctuations in interest rates could adversely affect the company's performance.

CAM (CADA - Cramer's Take - Stockpickr) 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 strong revenue growth, solid financial position and stock performance, and growth in net income.

Powered by earnings growth of 70% for the first quarter of 2008, this stock has surged 64% over the past year. Revenues rose 37% year over year. CAM has no debt to speak of, giving it a debt-to-equity ratio of zero, which we consider a favorable sign. Net income increased 75% from the year-ago quarter.

Finally, the company has demonstrated an impressive pattern of positive EPS growth over the past two years. Looking forward, we feel that this trend should continue.

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This article was written by a staff member of TheStreet.com Ratings.

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