Rollins, J&J Snack: Top 5 Mid-Cap Stocks

TheStreet.com Ratings provides exclusive stock, ETF and mutual fund recommendations using proprietary tools. Our "safety first" approach aims to reduce risk while achieving total return performance.

BOSTON (TheStreet) -- The following mid-cap companies have market values between $500 million and $10 billion and "buy" ratings from our quantitative model, which considers more than 60 factors. They're ordered by their potential to appreciate, starting with the company with the best growth prospects.

Pegasystems(PEGA Quote) sells software that automates business processes.

The numbers: Second-quarter net income surged 294% to $11 million and earnings per share increased 275% to 30 cents. Revenue rose 25% to $64 million. Its gross margin advanced from 59% to 66% and its operating margin grew from 5% to 18%. Pegasystems has an outstanding liquidity position, evident in its quick ratio of 3.9, and has no debt.

The stock: Pegasystems has rocketed 140% this year, beating major U.S. indices. The stock trades at a price-to-earnings ratio of 45, a premium to the market and application software peers. The shares offer a dividend yield less than 1%.

Rollins(ROL Quote) provides pest and termite control services.

The numbers: Second-quarter net income increased 12% to $25 million, or 26 cents a share. Revenue remained steady at $284 million. Its gross margin rose from 49% to 50% and its operating margin increased from 14% to 15%. Although Rollins has a weak liquidity position, with a quick ratio of 0.4, it has a modest debt load, reflected in a debt-to-equity ratio of 0.2.

The stock: Rollins is up 1% this year, trailing major U.S. indices. The stock trades at a price-to-earnings ratio of 24, a premium to the market and environmental service firms. The shares offer a 1.5% dividend yield.