Top Five Large-Cap Stocks: Hess, Noble

Management feels that Noble continues to deliver excellent results, as demonstrated by a fifth consecutive quarter of record earnings. Bear in mind, however, that Noble's performance is dependent on the number of rigs operational in the market, which is in turn determined by the quantum of drilling activities. These activities are cyclical in nature. Additionally, lower demand for energy products caused by weakness in the U.S. economy could ultimately impact drilling-related activities.

Apache (APA Quote - Cramer on APA - Stock Picks) is an independent energy company that explores for, develops and produces natural gas, crude oil and natural gas liquids. The company has interests in Argentina, Australia, Canada, Egypt, the U.K. and the U.S. Apache is also beginning exploration activities in Chile.

The stock has been rated a buy since January 2003 due to such strengths as revenue and net-income growth, solid stock-price performance and an impressive record of EPS improvement. Management reported strong financial results for the first quarter of fiscal 2008, with revenue increasing 57% year over year and net income doubling to $1.02 billion. Earnings per share climbed to $3.03 from $1.47 a year ago. The company's strong earnings growth helped drive Apache's stock price, which is already up by 81% in the past year. Despite this nice gain, we feel that the stock should continue to move higher. Finally, the company recently declared a dividend of 15 cents per share, payable on Aug. 22.

Looking ahead, management expects production to accelerate in the second half of fiscal 2008. It expects the increased activity to occur in the U.S., Argentina and Canada. The company also forecasts long-term production growth to be fueled by the first quarter's exploration successes and the new wells that are planned for drilling in 2008. However, Apache's future performance also depends on its ability to achieve positive results from previous acquisitions. Additionally, the company currently faces challenges from its increasing debt levels and comparatively low shareholder returns.