Top Five Mid-Cap Stocks: March 20

Updated from 7:12 a.m. EDT

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 we focus on mid-caps. These are stocks of companies that have market capitalizations of between $500 million and $10 billion that 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.

Sigma-Aldrich (SIAL Quote - Cramer on SIAL - Stock Picks) develops, manufactures and distributes a broad range of quality biochemicals and organic chemicals. These chemical products and kits are used in scientific and genomic research, biotechnology, pharmaceutical development and the diagnosis of disease. They are also used as key components in pharmaceutical and other high-technology manufacturing. The company operates in 35 countries, with facilities in Australia, Canada, France, Germany, India, Japan, Singapore, Switzerland, the U.K., and various U.S. states.

Our buy rating for Sigma-Aldrich has been in place since November 2003, supported by a strong financial performance. Revenue increased 15% year over year for the fourth quarter of 2007, primarily due to solid organic growth and further helped by acquisitions and favorable exchange-rate effects. Net income increased to $84.9 million from $71.6 million in the year-ago quarter. Looking forward, management expects earnings per share to range from $2.52 to $2.62 in fiscal year 2008.

Sigma-Aldrich is setting up a manufacturing hub in China as part of its efforts to generate 25% of its total revenue from Canada, the Asia-Pacific, and Latin America by 2010. The company is also considering construction of a facility in South Korea to supply electronic chemicals for use in the semiconductor market. There are also plans to expand capacity at facilities in Ireland and Switzerland. Successful completion of these initiatives could further strengthen Sigma-Aldrich's business going forward. However, any unexpected delay in commercializing the company's strong product pipeline could impact its revenue stream. Any slowdown in consumption industries could also have adverse effects.

Flowserve (FLS Quote - Cramer on FLS - Stock Picks) develops, manufactures, and sells precision-engineered flow equipments through 3 divisions: Flowserve Pump, Flow Control, and Flow Solutions. The company operates worldwide, with 43% of revenue coming from North America.

We have rated Flowserve a buy since January 2007. This is based on robust revenue growth, good cash flow from operations and expanding profit margins. Flowserve's revenue rose 19% year over year for the third quarter of 2007. The company also reported EPS of $1.10, compared with 49 cents in the third quarter of 2006. Furthermore, net operating cash flow has significantly increased to $106.77 million in the same period, and the company has a gross profit margin of 36%, which we consider strong.

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