Top Five All-Around Value Stocks: April 8

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.

Hess (HES Quote) explores for, produces, purchases, transports and sells crude oil and natural gas. The company conducts exploration and production activities 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.

We have rated Hess 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 continue to benefit from the current pricing trend.

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 the demand for oil and gas products.

Berkshire Hathaway (BRK.B Quote) is a holding company whose insurance and reinsurance activities are conducted through more than 60 domestic and foreign-based insurance companies. Additionally, the company's subsidiaries write property and casualty insurance, sell building products and architectural coatings, supply connector products and engineering software, manufacture apparel and aircraft, provide high-technology training for aircraft and operate utility and energy businesses.

Berkshire Hathaway has been rated a buy since April 2003. The company's strengths can be seen in multiple areas, such as revenue growth and solid stock price performance. Revenue rose 6.9% year over year in the fourth quarter of fiscal 2007. Overall, the company's 76 operating businesses performed well, although businesses linked to the housing market faced challenges. Berkshire Hathaway moved to diversify its business during the fourth quarter by creating Berkshire Hathaway Assurance to guarantee municipal bonds. For fiscal 2007, the company earned $13.21 billion, which represents an increase of 20% compared to fiscal 2006 results. Total revenue for the full year also grew 20% to $118.24 billion.

Looking forward, even the best stocks can fall in an overall down market, but in any other environment, this stock still has good upside potential despite its rise in the past year.