Medco, Colgate: Top 5 Large-Cap Stocks

BOSTON (TheStreet) -- The following companies have market values of more than $10 billion and receive "buy" ratings from our proprietary 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.

Medco Health Solutions(MHS Quote) is one of the largest pharmacy-benefit managers in the U.S.

The numbers: Second-quarter net income rose 19% to $312 million and earnings per share jumped 26% to 64 cents, boosted by a lower share count. Revenue increased 17% to $15 billion. Its gross margin was unchanged at 7% and its operating margin remained steady at 4%. Medco has less-than-ideal liquidity, reflected in its quick ratio of 0.9. A debt-to-equity ratio of 0.8 indicates reasonable leverage.

The stock: Medco has advanced 33% this year, more than the Dow Jones Industrial Average and S&P 500 Index. The stock trades at a price-to-earnings ratio of 24, a premium to the market and health-care peers. The company doesn't pay dividends.

Colgate-Palmolive(CL Quote) sells personal products, such as toothpaste and soap.

The numbers: Second-quarter net income rose 14% to $562 million and earnings per share jumped 16% to $1.07. Revenue fell 6% to $3.7 billion. Its gross margin rose from 59% to 61% and its operating margin increased from 21% to 24%. A quick ratio of 0.8 indicates less-than-ideal liquidity. A debt-to-equity ratio of 1.5 reflects higher-than-ideal leverage.

The stock: Colgate-Palmolive has advanced 15% this year, beating the Dow, but trailing the S&P 500. The stock trades at a price-to-earnings ratio of 20, indicating parity with the market, but a premium to household products peers. Shares pay a 2.2% dividend yield.