Each weekday, TheStreet.com Ratings compiles a list of the top five stocks in five categories -- fast-growth, all-around value, large-cap, mid-cap and small-cap -- and publishes these lists in the Ratings section of our Web site.
This list, updated daily, is based on data from the close of the previous trading session. Today, all-around-value stocks are in the spotlight. 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.
First up is insurance and financial services company
, which has merited a buy rating since March 2005. With a strong market position and favorable industry trends, the company is positioned for continued strong financial performance.
MetLife has bolstered its market position in the core insurance and annuity business with its acquisition of Travelers Insurance Company and the completion of a distribution agreement with
in 2005, giving it one of the broadest distribution networks in the sector. Ongoing consolidation within the industry will lead to sustained growth. Risks include changes in interest rates, equity prices and any slowdown of the economy.
As with other insurance and financial services companies, MetLife is vulnerable to any sharp fluctuation in equity markets, a decline in investment spreads, negative competitive effects on premium rates, adverse regulatory developments and any unexpected catastrophic event.
Financial services firm
has been rated a buy since March 2006. The rating is based on favorable industry trends due to positive developments in the employment market coupled with improving corporate confidence, as well as recent acquisitions and joint ventures. The company has seen income growth from continuing operations, and a $3 billion stock repurchase plan is scheduled for fiscal year 2007, which could boost EPS, return on equity and the share price.
The main risks could arise from any sharp fluctuation in equity markets, a decline in investment spreads, negative competitive evens on premium rates, any adverse regulatory developments and unexpected catastrophic events.
is involved in every aspect of crude oil and natural gas, from exploration to distribution. It has earned a buy rating since May 2005. The company has shown steady top-line growth and increased revenue, primarily due to increased production volumes. Revenue growth was also driven by a combination of higher average crude oil selling price and production, as well as higher gas sales volume.
Hess made significant investments in oil and gas exploration in the recent past, at a time when oil prices were close to record levels. Any unexpected sharp downturn in oil and gas prices may hurt earnings. Exploration disruptions could also harm results.
Global integrated energy company
has been rated a buy since March 2005. TheStreet.com Ratings' recommendation is based on the company's higher net income and earnings per share and expanding margins, as well as new reserve discoveries and greater production volumes.
Risks to the buy rating depend on the future movement of crude oil and natural gas prices, as well as the efficiency in production from new discoveries.
Rounding out the top five is construction and agricultural equipment manufacturer
, which has been rated a buy since March 2005. Rising revenue, driven by strength in the agricultural sector, and expanding profit margins seem to be contributing to earnings advances. The company's ongoing efforts in asset management have enabled it to respond effectively to changing market conditions.
Deere is subject to risks related to the actions of governments in the countries where it does business, as well as global weather patterns, which can affect demand for its products. Deere also has a high debt-to-equity ratio of 2.59 that exposes it to the usual risks associated with carrying significant leverage.