Top Five Mid-Cap Stocks

Strayer is working to expand its geographic footprint and expand student enrollment. It recently opened two new campuses for the summer term in new Florida markets. The company has now opened six of the nine new campuses planned for 2008. Due to its strong enrollment growth of 19% for the spring term, management estimates second-quarter EPS will range from $1.45 to $1.47. However, these projected results could be negatively impacted should the company fail to increase student enrollment or successfully implement its growth strategy.

Woodward Governor (WGOV Quote - Cramer on WGOV - Stock Picks) designs, manufactures and services energy control systems and components for aircraft and industrial engines, turbines and other power equipment. Founded in 1870 and currently headquartered in Fort Collins, Colo., the company serves customers worldwide. Customers are typically original equipment manufacturers (OEMs) who use Woodward's products in the power generation, process industries, transportation and aerospace markets.

We have rated Woodward a buy since November 2004 based on strengths such as robust revenue growth, a solid stock performance, and an impressive record of EPS growth. For the second quarter of fiscal 2008, revenue rose 19% year over year. The company improved its EPS to 43 cents in the most recent quarter from 29 cents a year ago. Net income increased 47% to $29.7 million. Additionally, Woodward has a debt-to-equity ratio of 0.13, which implies successful management of debt levels.

The company believes that prior investments to boost geographic expansion and market penetration allowed Woodward to achieve sales growth in the second quarter despite economic uncertainty. The company's outlook for the remainder of the fiscal year is therefore positive, leaving management to anticipate companywide sales growth of 14% to 16% year over year for fiscal 2008. The company also expects earnings in the range of $1.61 to $1.66 a share for the full year. Woodward's stock has already experienced a very nice gain of 48% this year, but we feel that the stock should continue to move higher. Bear in mind, however, that even the most promising stocks can fall during broader market declines.

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