Top 5 All-Around-Value Stocks for Dec. 31

This list is based on data from the close of the Dec. 29 trading session.

Today, TheStreet.com Ratings team has compiled a list of the top five stocks in the all-around value category. 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.

NTT DoCoMo (DCM Quote) provides wireless telecommunications services in Japan. It ranks among the largest cellular phone service operators in the world, as measured by the number of total subscribers. The company has more than 53 million subscribers in Japan. The company also works to advance mobile technologies and standards through research and development, launching such products as i-mode, a platform for mobile Internet services, and FOMA, the world's first 3G commercial mobile service based on W-CDMA. The company also has a steadily growing international presence through a network of subsidiaries, offices, research facilities, and global partners.

We upgraded NTT DoCoMo to a BUY in February 2008. This rating is supported by a variety of strengths, such as the company's solid stock price performance, impressive record of earnings per share (EPS) growth, and largely solid financial position. The company reported in October that its earnings surged 40.0% year-over-year in the second quarter of fiscal 2008 due to lower costs as a result of a reduction in handset incentives. EPS improved 44.4% from $0.27 a year ago to $0.39, continuing a trend of positive EPS growth over the past year. Return on equity exceeded that of the prior year's quarter, rising from 9.28% to 14.41%. This is a clear sign of strength within the company.

In addition, the company's very low debt-to-equity ratio of 0.12 is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with this, a quick ratio of 1.33 indicates that NTT DoCoMo has the ability to avoid short-term cash problems.

The mobile operations market in Japan is becoming increasingly competitive, due to such factors as price competition and market entry by new businesses. The company has taken these market conditions into account in setting guidance for the fiscal year ending March 2009. Currently, it expects net income of Yen 495.00 billion on operating revenue of Yen 4,597.00 billion.

Although even the best stocks can fall in an overall down market, we feel that this stock has good upside potential in almost any other market environment. In addition, we feel that its strength outweigh the fact that it currently shows weak operating cash flow.