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 we focus on mid-caps. These are stocks of companies with market capitalizations of between $500 million and $10 billion that 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
, which manufactures highly engineered products and materials for the chemical, industrial, energy, transportation and infrastructure markets worldwide.
The company's products include such items as high-performance coatings and surfacer systems for the preservation of structures, molded fiberglass pipes and fittings, ready-mix concrete and products and services used in the construction of water pipelines. 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 its fiberglass-composite-pipe group and TAMCO (Ameron's 50%-owned steel mini-mill) led to higher results in the second quarter of fiscal 2008. Ameron reported a year-over-year revenue increase of 1.9%, 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 $15.8 million to $16.3 million. Return on equity also improved slightly, and the company appears to be successfully managing its debt levels.
Management overall was 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 most likely will continue to negatively affect its 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.
designs, manufactures and markets electrical, electronic and fiber-optic connectors, interconnect systems and coaxial and flat-ribbon cable. Its connectors and interconnect systems are used primarily to conduct electrical and optical signals for a range of sophisticated electronic applications. The company has facilities for manufacturing and assembling its products in the Americas, Europe, Africa and Asia.
Our buy rating for Amphenol has been in place since June 2003. The company reported record EPS growth of 33% year-over-year for the second quarter of fiscal 2008, along with record sales that rose 23% to $846.8 million. The global communications, military and commercial aerospace markets performed particularly well for the company, although growth was broad based. Net income for the second quarter rose to $110 million from $84 million a year ago.
During the quarter, Amphenol broadened its technology offering in the military market by completing the acquisition of a U.S. manufacturer of audio interconnect products for that market. Additionally, the company's profitability and cash flow remained strong in the second quarter.
Looking ahead, Amphenol forecasts revenue for the fiscal third quarter in the range of $825 million to $840 million. In addition, EPS is expected to be in the range of 59 cents to 61 cents a share. The company raised its full-year 2008 revenue growth guidance to a range of 15% to 16% year-over-year, or $3.28 billion to $3.31 billion. Management reported continued strength in its business despite economic uncertainties and a generally moderate demand in certain markets. However, low profit margins could be a concern, as could any unfavorable changes, particularly in the communication and defense markets, which are the company's highest revenue contributors.
markets casual apparel such as denim, sportswear, outerwear, accessories and footwear under the brand names Buckle and The Buckle. The company operates more than 370 retail stores targeted at young men and women throughout the central, northwestern, southeastern, and southwestern U.S. Along with the company's own brand, its retail stores also offer popular brands such as Lucky Brand Dungarees, Ecko and LeTigre. The Buckle is headquartered in Kearney, Neb.
The Buckle has been rated a buy since May 2003 due primarily to its solid financial position and growth in revenue, net income and EPS. In the first quarter of fiscal 2008, the company's revenue rose 32.4% year-over-year. The company improved its EPS from 40 cents a share to 61 cents a share over the same period. Net income also increased by 53.5%, rising from $12.19 million in the first quarter of fiscal 2007 to $18.72 million in the most recent quarter.
The Buckle reported a gross profit margin of 44.1%, which also increased from the same quarter one year prior. Finally, the company is clearly able to cover its short-term cash needs as it has no debt to speak of and most recently earned a quick ratio of 3.15.
While no company is perfect, we currently do not see any significant weaknesses likely to detract from this company's generally positive outlook. It is important to bear in mind, however, that the specialty retail industry as a whole could face pressures from a continued housing market contraction or a slowing economy. Such events could lead to a more challenging business environment that could potentially affect The Buckle's results and therefore the buy rating.
is a multi-industrial manufacturing firm that provides flow technology products, test and measurement products, thermal equipment and services, and industrial products and services in the U.S. and abroad. Its products include valves, backflow prevention and fluid handling equipment, air filtration products, power transformers and high-tech die castings. The company's products are used by a range of customers in various industries, including chemical processing, pharmaceutical, automotive, telecommunication, transportation and power generation. The company is headquartered in Charlotte, N.C., and has operations in 35 other countries.
SPX has been rated a buy since June 2007 due to its robust revenue growth, solid stock price performance, impressive record of EPS growth and largely solid financial position. For the second quarter of fiscal 2008, revenue rose 28.8% year-over-year as a result of strong demand for the company's engineered products. EPS improved 37.1% over the prior year quarter, rising from $1.24 to $1.70. Net income increased 48.4%, rising from $63.9 million in the second quarter of fiscal 2007 to $94.8 million in the most recent quarter.
A relatively low debt-to-equity ratio indicates that the company has been somewhat successful in its efforts to manage debt levels. Additionally, SPX's stock price has surged 34.9% over the past year, powered by factors like its strong earnings growth of 37.1% over the same period.
Looking ahead, the company raised its EPS guidance to a range of $6.40 to $6.60 based on its second-quarter results and current trends. Bear in mind, however, that while the company's strengths outweigh any weaknesses in our opinion, SPX does show weak operating cash flow.
designs, manufactures and sells pumps and related equipment for use in various liquid-handling applications, such as wells, wastewater, agricultural systems, fire protection and military uses. The company's pumps have a variety of uses, from pumping refined petroleum products for fueling aircraft and water for fire fighting to ice cube dispensing equipment and office copy machines.
Our buy rating Gorman-Rupp has not changed since November 2005. The company's strengths can be seen in multiple areas, such as its revenue and net income growth, largely solid financial position and impressive record of EPS growth. Revenue for the second quarter of fiscal 2008 rose 5.5% year-over-year. The company's second-quarter net income of $7.9 million represents a 20.8% increase from the $6.54 million reported one year ago. As a result, the company was able to report EPS of 47 cents, representing a 19.9% improvement over the 39 cents it earned in the second quarter of fiscal 2007.
Improved operating leverage on additional sales, a favorable product sales mix and a lower effective tax rate helped Gorman-Rupp achieve its record earnings results for the second quarter. Additionally, the company reported record net sales results, which resulted from continued increases in international sales. Finally, the company ended the quarter with no debt to speak of and a quick ratio of 2.63, which indicates that it has the ability to cover short-term cash needs.
Management announced that it was encouraged by the number of new orders received during the first half of fiscal 2008, given current economic conditions. Bear in mind, however, that the machinery industry as a whole faces challenges from rising commodity costs. Customers have historically absorbed the commodity increases as surcharges that have helped cover the difference, but there is no guarantee that this will continue.
Although Gorman-Rupp's stock is currently trading at a premium valuation, we feel that the company's strengths justify the higher price levels at this time.
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 impact the stock price, nor does it include recent technology developments and competitive dynamics that may affect the company.
This article was written by a staff member of TheStreet.com Ratings.