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, 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 of 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.
Leading the list today is
, which makes navigation, communications and information devices based on GPS technology. It has been rated a buy since September 2005. The company has shown outstanding revenue growth, notable return on equity, a two-year pattern of steady increases in EPS, and it is carrying no debt.
These strengths outweigh the fact that Garmin is trading at a premium valuation according to TheStreet.com Ratings' review of its current price compared with factors such as earnings and book value.
, which has been rated a buy since July 2005, designs, manufactures and markets electrical, electronic and fiber-optic connectors. Amphenol has undertaken recent initiatives to strengthen margins and reduce costs; it now manufactures about 67% of its products in low-cost countries. It also leases facilities instead of buying them and frequently employs temporary or part-time workers in place of full-timers. These strategies have enabled it to achieve significant cost savings and helped attain some of the highest profit margins in the industry.
The company focuses on the needs of its original equipment manufacturer customers to develop highly engineered products and systems that meet specific customer needs. It directs its R&D efforts mainly in those areas, which it believes have the potential for broad market applications and considerable sales within a one-to-three-year timeframe, fueling both its revenue and profit growth.
The company has widespread global operations and as a result, any significantchange in the political and economic conditions could have an adverse impact on its business performance. Also, intense competition and increasing raw material costs could harm its margin.
produces fabricated metal products. It has been rated a buy since September 2005. The company's revenue grew 18.7% in the second quarter of 2007 compared with the year-earlier period, exceeding the industry average of 5.1%. Its debt-to-equity ratio of 0.55 is below the industry average, implying that there has been successful management of debt levels.
Valmont has demonstrated a pattern of positive EPS growth over the past two years, a trend that should continue. Powered by strong earnings and other factors, the company's stock price has increased by 58.32% over the last 12 months, and while it is now somewhat expensive compared with its industry peers, the company's strengths justify the higher price level.
Oilfield services company
has been rated a buy since July 2005. It saw double-digit revenue growth across its segments in the second quarter compared with the same period last year, and its operating margin for the quarter hit 28.16%, driven by increased exploration and drilling activity.
Schlumberger also completed the acquisitions of Geosystem and Tyumenpromgeofizika, a supplier of land and marine electromagnetic and seismic imaging services, and a geophysical and wireline logging services provider in Western Siberia. Schlumberger also shows a strong net income growth and improved return on equity, a clear sign of strength.
The stock is not without its risks. In the short term, management has cautioned of uncertainty in its North American market due to a rapid rise in gas storage levels and expected declines in commodity prices. These factors could hurt the company's performance over the long run.
Air Products and Chemicals
, a chemical and gas producer, has been rated a buy since August 2005 on the basis of the company's strong revenue growth, increasing net income, expanding operating margin and improved return on equity. In July, Air Products and Chemicals said that third-quarter sales surged 15.6% to $2.6 billion compared with the same period last year.
Earnings climbed 35.5% to $284.9 million, or $1.28 a share, in the quarter, sparked by higher sales volume and expanding operating margins. Return on equity for the quarter improved 136 basis points to 16.61%, primarily because of the increase in net earnings. Risks to the buy rating include challenges associated with integrating acquisitions and any unfavorable effects of currency fluctuation.