Each business day,
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 is based on data from the close of the previous trading session. Today, fast-growth stocks are in the spotlight. These are stocks of companies that are projected to increase revenue and profit by at least 12% in the coming year and rank near the top all stocks rated by our proprietary quantitative model, which looks at over 60 factors.
In addition, the stocks must be followed by at least one financial analyst who posts estimates on the Institutional Brokers' Estimate System. Please note that definitions of revenue vary by industry, and this screen does not make adjustments for acquisitions, which can materially affect posted results. Likewise, earnings-per-share growth may be affected by accounting charges, share repurchases and other one-time items.
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.
distributes industrial, medical and specialty gases (delivered in packaged or cylinder form) and welding, safety and related products (hard goods). Airgas is the largest producer of nitrous oxide in the U.S., a producer and supplier of dry ice and a supplier of liquid carbon dioxide in the southeastern U.S.
We have rated Airgas a buy since May 2006 on the basis of several positive investment measures, such as the company's robust revenue growth, solid stock price performance, impressive record of earnings-per-share growth, compelling growth in net income and reasonable valuation levels.
On July 23, the company reported that its net earnings in the first quarter of fiscal year 2009 surged 33.2%, driven by acquisition and organic growth in its key end-markets. Net income rose to $68.88 million or 81 cents per share in the quarter from $51.72 million or 63 cents per share in the same quarter last year. During the first quarter, revenue ascended 22.0% to $1.12 billion from $915.10 million a year ago, helped by a 15.0% contribution from acquisitions and 7.0% growth in same-store sales.
Moreover, ARG's strategic product categories, which contribute 40.0% of total revenue, grew 10.0% organically. Segment-wise, revenue from gas and rent rose 21.1% to $656.91 million from $542.25 million, while revenue from hard goods increased 23.3% to $459.79 million from $372.85 million in prior-year's quarter.
During the quarter under review, Airgas completed the acquisition of the packaged gas operations of
Linde Gas USA
for $310 million. As per the deal, the acquisition involved 130 locations, including branches, warehouses, packaged-gas-fill plants and other operations involved in distributing packaged industrial and specialty gases and related equipment.
Looking ahead to the second quarter of fiscal year 2009, Airgas anticipates its EPS to range from 82 cents to 84 cents per share. For the full fiscal year 2009, the company raised the lower end of its EPS forecast to a range of $3.30 to $3.40 per share from its previous guidance of $3.24 to $3.40 per share. While the company has a high leverage level, we feel its strengths outweigh the fact that it has had generally poor debt management on most measures that we evaluated.
engages in the development, manufacture and sale of precision-engineered flow equipments through three divisions: flowserve pump, flow control and flow solutions. The company operates worldwide in more than 56 countries, with 43% of its revenue coming from North America.
We have rated Flowserve a buy since January 2007 on the basis of several positive investment measures, such as the company's increasing revenue and net income. On July 30, the company reported that its net earnings for the second quarter of fiscal year 2008 increased 94.4% year over year to $122.86 million from $63.21 million, attributable to increased sales in the flowserve pump (up 21.0% year over year), flow control (up 30%), and flow colutions (up 29%) divisions.
Revenue in the quarter increased 24.4% to $1.16 billion from $930.68 million a year ago, driven by strong growth in the power and chemical markets, as well as continued strength in the oil and gas market. The revenue result for the latest quarter included currency benefits of about $85 million. Furthermore, earnings per share increased 91.9% to $2.13 per share from $1.11 per share a year ago.
For the full fiscal year 2008, the company again raised its earnings outlook to a range of $7.20 to $7.50 per share, from its previous expectation of $5.90 to $6.20 per share announced at the end of the previous quarter. The company said it is encouraged by the results from the first half of fiscal year 2008 and its continued strength in key markets and remains confident in its ability to successfully carry out its operational excellence initiatives to increase its performance in the current global environment. Bear in mind, however, that the recent surge in commodity costs is a challenge to the machinery industry as a whole and could therefore affect Flowserve's results in the future.
is a diversified, global chemical company operating in three business segments: agricultural products, specialty chemicals and industrial chemicals.
We have rated FMC a buy since July 2004. Although the company may harbor some minor weaknesses, its strengths can be seen in multiple areas. Revenue growth, for example, was reported at a rate of 22.6% year over year for the second quarter of fiscal 2008. Additionally, FMC significantly improved its earnings per share (EPS) from 19 cents in the second quarter of fiscal 2008 to $1.20 in the most recent quarter and has demonstrated a pattern of positive EPS growth over the past two years.
Additionally, net income rose 881.4% when compared with the same quarter one year prior, rising from $8.6 million to $84.40 million. According to the company, the record second-quarter results were driven by strong sales across all business segments.
Looking forward, management expects to see strong commercial performance across all segments in the third quarter of fiscal 2008, with the outlook for the industrial chemicals segment standing out as being especially promising. The company recently raised its full-year 2008 outlook on the basis of its first-half results and now anticipates earnings of $4.20 to $4.40 per diluted share. The company said it is confident in its ability to achieve these results despite rising raw-material costs, but it is important to bear in mind that such costs and the overall strength of the economy could negatively affect FMC's financial results in the future.
is one of the nation's oldest providers of radioactive, hazardous and industrial waste management services. The company's customers are commercial and government entities, such as nuclear power plants, medical and academic institutions, steel mills, refineries and chemical production facilities.
We have rated American Ecology a buy since October 2005. The company reported record operating results for the second quarter of fiscal 2008, as operating income rose 20% year over year to $9.8 million. Net income also climbed 20%, reaching $6.1 million compared with $5.1 million in the same quarter one year prior, because of strong growth in disposal service revenue as the Idaho, Nevada and Texas waste facilities increased the amount of waste disposed by 18% year over year.
However, lower transportation revenue partially offset the increase in disposal service revenue. American Ecology also reported a 17% increase in gross profit for the second quarter, and the company had no debt at quarter-end. In addition, the company declared a quarterly dividend of 18 cents per common share, which was a 20% increase from the prior-quarterly dividend of 15 cents per common share.
Looking ahead, the company announced that it expects to reach or possibly surpass its previously announced fiscal 2008 earnings guidance of $1.17 to $1.23 per diluted share. Management cautioned that the company will require a strong second-half contribution from the thermal desorption recycling service that was initiated in late June, along with solid even business results if it is to exceed its guidance range.
develops, manufactures and markets specialty performance ingredients and products for the food, feed and mechanical sterilization industries. Balchem produces choline products for both human and animal consumption. Choline, a vitamin-B complex, plays a vital role in the metabolism of fat and the building and maintaining of cell structures.
Our buy rating for Balchem has not changed since June 2003. The company again reported record quarterly results in net sales for the second quarter of fiscal 2008, achieving a 41.8% increase year over year due to both organic and acquisition growth.
Balchem also reported record net earnings, which increased 16.2% when compared with the second quarter of fiscal 2007. As a result, the company's net earnings per diluted common share increased 13.6% to 25 cents per share from 22 cents per share in the second quarter of fiscal 2007. Additionally, Balchem reported that its balance-sheet ratios and cash flow continued to be strong in the second quarter.
Management was pleased with the company's record results in the second quarter despite a difficult business environment. The company has worked to increase its global presence, and overseas demand has helped offset the challenges of the U.S. market. Balchem said it expects rising raw-material costs to continue affecting its financial results in the near term, but management stated that it would take appropriate steps to minimize the impact on operating margins and cash flow. Bear in mind, however, that global economic issues could still affect the company's results.
Our quantitative rating is based on a variety of historical fundamental and pricing data and represents our opinion of a stock's risk-adjusted performance relative to other stocks.
However, the rating does not incorporate all of the factors that can alter a stock's performance. For example, it doesn't always factor in recent corporate or industry events that could affect the stock price, nor does it include recent technology developments and competitive dynamics that may affect the company.
For those reasons, we believe that a rating alone cannot tell the whole story and that it should be part of an investor's overall research.
This article was written by a staff member of TheStreet.com Ratings.