STOCK PICKS: Top 5 Fast-Growth for Aug. 11

In other developments, the company disclosed on May 19th that federal investigators have launched an investigation into the company's recruitment practices, and that management is cooperating fully with this probe. While we believe the stock is a strong one based on its quantitative merits, this is a situation that bears will be watching.

Badger Meter(BMI Quote) manufactures and markets flow measurement and control products. These products measure a variety of liquids, such as water, oil and lubricants. The company serves utilities, municipalities, and industrial customers worldwide. The company was founded in 1905, and has major U.S. facilities in Wisconsin and Oklahoma. Foreign facilities are located in Mexico, Germany, and the Czech Republic.

Badger has been rated a buy since August 2003. The company's strengths include its revenue growth, net income growth and solid return on equity. For the second quarter of fiscal 2008, Badger's revenue rose by 20.1% year over year. This growth appears to have trickled down to the bottom line, boosting earnings per share (EPS) by 23.1%. Net income increased by 28.8% over the same period, rising from $5.47 million a year ago to $7.04 million. Finally, return on equity also improved slightly in the quarter from 18.06% to 22.15%.

Investors have begun to recognize Badger's strengths, including earnings growth. As a result, the company's shares have risen by a sharp 62.75% over the past year. While this makes the stock somewhat expensive compared with the rest of its industry, we felt that the company's strengths justify the higher price levels at this time. Bear in mind, however, that Badger's future performance could be affected by any regulatory changes, especially those dealing with the use of lead, which is used in the manufacture of certain meters, or the use and/or licensing of radio frequencies necessary for the company's automatic meter reading and advanced metering infrastructure products. Badger's future results could also be affected by the overall health of the U.S. economy, including housing starts and overall industrial activity, and any changes in foreign economic conditions, including currency exchange rates.