Top 5 Mid-Caps for Dec. 18

Looking ahead to fiscal 2009, New Jersey Resources forecasts net financial earnings in the range of $2.30 to $2.40 per basic share. Approximately 30% to 40% of those earnings are expected to come from the company's wholesale energy services subsidiary, NJR Energy Services. The company shows low profit margins, but we feel that its strengths outweigh any potential weakness at this time. Strong earnings growth has helped the stock price rise over the past year, and the stock should see more upside potential unless a broad bear market prevails.

California Water Service Group(CWT Quote) is a holding company that provides water utility and other related services in California, Washington, New Mexico and Hawaii through its subsidiaries. We upgraded it to a buy in August 2008. Our rating is based on a number of company strengths, including its revenue and net income growth, impressive record of EPS growth, expanding profit margins and good cash flow from operations.

For the third quarter of fiscal 2008, the company's revenue rose 15.7% year over year. Revenue growth appears to have helped boost EPS, which improved over the past year from 67 cents to $1.06. Net income also increased when compared to the same quarter a year ago, climbing 60.6% from $13.8 million to $22.2 million. We consider the company's gross profit margin of 37.6% to be strong. It has increased from the same quarter of fiscal 2007. In addition, the net profit margin of 16.80% is above that of the industry average. Furthermore, net operating cash flow has increased significantly, rising 86.6% to $48.3 million.