Each business day, 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 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.
American Ecology Corporation
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. Other services include such services as waste stabilization, encapsulation and chemical oxidation.
We have rated American Ecology a buy since October 2005. Strengths such as revenue growth, a largely solid financial position and a notable return on equity influenced this rating. For the first quarter of fiscal 2008, American Ecology's revenues rose by 18.6% year over year. This growth appears to have trickled down to the bottom line, improving earnings per share (EPS) by 18.5% over the first quarter of 2007. In fact, the company has demonstrated a pattern of positive EPS growth over the past two years. A slight improvement in return on equity can be seen as a modest strength for the company. Finally, while total debt increased slightly year over year, it remains at an almost negligible level.
Looking ahead, the company anticipates fiscal 2008 earnings to be in the range of $1.17 to $1.23 per diluted share. This estimate is based on the company's record first quarter results and its strong outlook for the second quarter. Additionally, we feel that American Ecology's strengths outweigh the fact that the company currently shows weak operating cash flow.
Ameron International Corporation
manufactures highly-engineered products and materials for the chemical, industrial, energy, transportation and infrastructure markets worldwide. Products are produced at plants in a variety of locations throughout the U.S.--such as Arkansas, California, Oklahoma, Texas, and Washington--and through subsidiaries in Australia, Colombia, Malaysia, the Netherlands, New Zealand, Saudi Arabia and Singapore.
Ameron has been rated a buy since June 2005. Strong performances from the Fiberglass-Composite-Pipe Group and TAMCO (Ameron's 50%-owned steel mini-mill) led to higher results in the second quarter of fiscal 2008. The company reported a slight revenue increase of 1.9% year over year, which appears to have helped boost earnings per share (EPS) from $1.63 in the second quarter of fiscal 2007 to $1.78 in the most recent quarter. Net income increased 3.4% when compared to the same quarter one year prior, rising from $15.80 million to $16.33 million. Return on equity also improved slightly and the company appears to be successfully managing its debt levels.
Management was overall pleased with the year-to-date results, as the company's performance for the first half of fiscal 2008 was positive. The company anticipates steady returns for the year from its various businesses, with TAMCO and the Fiberglass-Composite-Pipe Group expected to continue performing at record levels. However, weak market conditions will most likely continue to negatively affect the Infrastructure Products Group. Bear in mind that the Building Products industry's performance is cyclical, depending on the overall health of the U.S. economy. The state of the housing and auto markets in particular could impact this industry and, therefore, this stock.
Diamond Offshore Drilling
engages in the contract drilling of oil and gas wells. The company's fleet of 30 submersibles enables it to offer a range of services in various markets worldwide, including the deep water, harsh environment and conventional semisubmersible markets. Diamond also owns 13 jack-up rigs, which are mobile, self-elevating drilling platforms equipped with legs that are lowered to the ocean floor until a foundation can be built to support the platform. Finally, Diamond also has one drillship, the Ocean Clipper, located offshore Brazil.
We have rated Diamond a buy since June 2005, on the basis of various strengths displayed by the company. Boosted by solid sales growth from its Contract Drilling business segment, Diamond's revenue surged 29.3% year over year to $666.70 million in the first quarter of fiscal 2008. First quarter earnings rose 29.7%, fueled by a rise in daily rates for the company's deepwater rigs. Net income for the quarter increased to $290.63 million, or $2.09 per share, from $224.15 million, or $1.64 per share, in the first quarter of fiscal 2007. In keeping with its policy of considering the payment of special cash dividends on a quarterly basis, the Board of Directors recently declared a special cash dividend of $1.25 per share of common stock in addition to a regular cash dividend of 12.5 cents per share of common stock. Both dividends are payable in June 2008. Finally, Diamond's debt-to-equity ratio is very low at 0.17, implying that debt levels have been successfully managed.
While lower than a year ago, Diamond's gross profit margin continued to remain relatively high at 61.80%. However, the company's net profit margin of 37.00% significantly outperformed against the industry. Furthermore, the company has demonstrated a pattern of positive earnings per share growth over the past two years, and we feel that this trend could continue. Although the company may harbor some minor weaknesses, we feel that they are unlikely to offset the company's strengths. Instead, we feel that the slowdown in the U.S. economy and weak job data pose larger risks as they may put pressure on the demand for oil and gas. This could in turn disturb activities related to exploration and production, affecting the number of rigs that are operational in the market and potentially affecting Diamond's future profitability.
manufactures electronic instruments and electromechanical devices. The company has operations throughout the United States and in more than 30 other countries. The company's Electronic Instruments segment manufactures advanced monitoring, testing, calibrating, and display instruments for the process, aerospace, power and industrial markets worldwide.
Ametek has been rated a buy since November 2002. The company's strengths include its consistent revenue, earnings per share (EPS), and net income growth, as well as its solid stock performance. In addition, Ametek's minimal exposure to the housing and automobile markets could insulate it from the sluggish U.S. economy. For the first quarter of 2008, the company reported a 30.4% increase year over year in earnings, led by operational improvements and a strong revenue growth of 21.0%. Continuing its pattern of EPS growth over the past two years, the company again reported improved EPS from 48 cents in the first quarter of 2007 to 62 cents in the most-recent quarter. Net income grew to $66.36 million from $50.90 a year ago. Furthermore, operating cash flow increased 39.0% to $77.0 million. Additionally, the company recently paid a quarterly dividend of 6 cents per share on March 31, 2008.
On June 12, the company announced its plans to acquire Vision Research, a privately held manufacturer of high-speed digital imaging systems used for motion capture and analysis in numerous test and measurement applications. Vision Research, located in Wayne, New Jersey, has estimated annual sales of approximately $37 million, and will become part of AME's Electronic Instruments Group (EIG) - a provider of advanced monitoring, testing, calibrating, and display instruments for the process, aerospace, power and industrial markets worldwide.
Going forward, Ametek estimates revenue for the full year 2008 to increase in the high teens on a percentage basis, while earnings are estimated to be in the range of $2.47 to $2.52 per share. Management also expects earnings for the second quarter to be approximately 61 cents to 63 cents per diluted share, an increase of 13% to 17% over last year's second quarter results. However, these results could be negatively affected should the company fail to successfully integrate its recent acquisitions. Other risks include the price and availability of raw materials and changes in the competitive environment.
is an international higher education company that operates DeVry University, Ross University, Chamberlin College of Nursing and Becker Professional Review. DeVry University offers career-oriented undergraduate and graduate programs in technology, business and management. Classes are offered at a number of locations, as well as through DeVry University Online.
The company has been rated a buy since January 2007. DeVry's strength's can be seen in a variety of areas, such as its impressive record of earnings-per-share (EPS) growth, compelling growth in net income, revenue growth and largely solid financial position. For the third quarter of fiscal 2008, DeVry reported EPS of $0.53, compared to $0.32 one year prior. This increase continues the company's demonstrated pattern of EPS growth over the past two years, a trend that we feel should continue. The company's third quarter net income of $38.32 million represents an increase of 67.2% when compared to the same quarter last year. DeVry also has no debt to speak of and its revenue rose by 18.4% in the second quarter.
In other developments, the company disclosed on May 19th that federal investigators have launched an investigation into the company's recruitment practices, and that management is cooperating fully with this probe. While we believe the stock is a strong one based on its quantitative merits, this is a situation that bears will be watching.
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.