Top 5 Mid-Caps for Jan. 8

Looking forward, California Water Service Group expects to be able to pursue water efficiency programs in order to benefit ratepayers and reduce overall water demand. Although the company may harbor some minor weaknesses, we fell they are unlikely to have a significant impact on results.

Tompkins Financial(TMP Quote) is the corporate parent of three community banks: Tompkins Trust Company, The Bank of Castile and Mahopac National Bank. We have rated it a buy since October 2007 on the basis of its notable return on equity, expanding profit margins, increased in net income and revenue, and solid stock price performance.

For the third quarter of fiscal 2008, the company reported revenue growth of 6.3% year over year. This appears to have helped boost EPS, which rose 15.7% to a record level for the company. EPS was reported as 81 cents for the third quarter, compared to 70 cents in the prior year's quarter. Net income also increased, rising 16.6% from $6.8 million to $7.9 million. Return on equity improved slightly over where it was a year ago, which can be construed as a modest strength for the company. Tompkins' return on equity of 14.1% exceeded the average for the Commercial Banking industry. The company's stock price has risen over the past year, reflecting earnings growth and other positive factors.

Management stated that the company was fortunate to operate in markets that were not as heavily impacted by the national and global economic crisis as some areas of the country. A focus on long-term results allowed Tompkins to continue to perform well in challenging economic times, allowing the company to grow its business while still avoiding high-profile risky loans and investments. Although the company's stock is currently trading at a premium valuation, we feel that its strengths justify the higher price levels at this time.