Top Five All-Around Value Stocks: March 25

Updated from 9:13 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, 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.

All-Star Value Plays

Hess HES explores for, produces, purchases, transports and sells crude oil and natural gas. The company conducts exploration and production in Algeria, Denmark, Norway, Malaysia, the U.K. and the U.S. The company also manufactures, purchases, trades and markets refined petroleum and other energy products.

Hess has been rated a buy since August 2004. The company displayed excellent performance in the fourth quarter of 2007 on the back of rising production and pricing trends because of successful exploration and development activities. Hess' revenue increased 32% year over year to $9.46 billion. Net income increased 42%, mainly because of lower operating costs and lower taxes. We believe Hess can leverage its strong fundamentals to benefit from the pricing trend in the future.

While oil prices are currently trading at a record level, these prices are also highly volatile and cyclical in nature. Because Hess generates a significant portion of its income from the production of oil and gas, any unexpected sharp downturn in oil prices could negatively affect the company's earnings. Such a downturn could occur if high oil prices generate demand for low-cost alternatives or if the slowdown in the U.S. economy and weakness in the U.S. labor market put pressure on demand for oil and gas products.

Murphy Oil MUR explores for and produces crude oil, natural gas and natural gas liquids worldwide. It has refining and marketing businesses in North Africa and the U.K. In the U.S., Murphy produces oil and natural gas from six fields operated by the company and three operated by others. The stock has been rated buy since January 2006.

Murphy Oil's strengths include its revenue growth, solid stock performance and a solid financial position. For the fourth quarter, revenue increased 68% year over year and net income more than doubled. The company attributed the increase to both higher product prices and increased production volumes, which overcame weakness in its refining results. While Murphy Oil's 46% one-year stock price increase makes it expensive compared to historical valuation levels, we feel that the company's strengths justify the move.