Each weekday, TheStreet.com Ratings compiles a list of the top 10 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 we look at all-around value stocks. These are stocks of companies that meet a number of criteria including annual revenue of over $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
, which sold its car business to Ford in 1999, but which still makes trucks, buses, construction equipment and aircraft engine parts. It has been rated a buy since January 2005. Volvo's strengths include its solid stock performance and growth in earnings per share and net income.
TheStreet.com Ratings feels that the company's weak operating cash flow isn't enough to threaten the company's buy rating, given its other strengths.
has been rated a buy since January 2005 and is the owner of one of the largest rail networks in the U.S. It has displayed compelling growth of net income, revenue and stock price, and its attractive valuation levels and good cash flow from operations have helped it significantly outperform the
The stock remains a buy despite its low profit margins and should continue to move higher despite its impressive gains of the past year.
has chugged along with a buy rating since February 2005. The company's revenue growth in the fourth quarter of 2006 outpaced the industry average, as has its net income growth. Earnings per share have increased steadily over the past two years, and during 2006 as a whole, EPS reached $5.91 compared with $3.84 the year before.
Given its wide range of impressive financial strengths, the company's low profit margins are no threat to the buy rating.
Rated a buy since October 2005, aerospace and defense contractor
shows a range of positive investment measures. The company has displayed an impressive record of EPS growth, good net operating cash flow and reasonable valuation levels.
Honeywell's strengths outweigh the company's low profit margins.
Rated a buy since January 2005,
provides installed building control systems and technical and facility management services. It also designs and assembles products and systems for passenger cars and light trucks, and provides advanced battery technology. The company shows a number of positive investment measures, including its revenue growth, solid stock performance, notable return on equity and impressive cash flow from operations.
These strengths outweigh the fact that Johnson has shown subpar net income growth.
, a fully integrated gas and electric holding company, has merited a buy rating since January 2005. Its EPS growth and increase in stock price during the 12-month period ending Jan. 31 have made it relatively expensive compared with its peers, but its strengths justify the increased price level.
Its strong performance outweighs the fact that the company has had subpar net income growth.
Rio de Janeiro energy company
has had a buy rating since December 2004. The company's strengths include its strong financial performance and the favorable oil industry outlook. Also, capacity-expansion plans could be a driver of long-term growth for the company. It plans to spend $49.3 billion from 2007 to 2011 to enhance and expand its exploration and production capability.
Potential risks include any sharp downturn in oil and gas prices or possible disruptions at production facilities in remote and politically sensitive regions of the globe.
Editor's Note: Because two classes of Petrobras are on this list, there will be only nine stocks listed today.
Oil and natural gas company
has been rated a buy since January 2005. Its attractive valuation levels and good cash flow from operations are positives. TheStreet.com Ratings believes these strengths outweigh the fact that the company has had subpar growth in net income.
has been rated a buy since October 2004. The company's General Re unit is one of the largest reinsurers in the world -- it also owns Geico, the fourth-largest U.S. auto insurer. Another unit, McLane, is a wholesale distribution and logistics business. Berkshire's strengths include robust revenue growth, a strong financial position with reasonable debt levels, solid stock performance, compelling growth in net income and attractive valuation levels.
TheStreet.com Ratings feels these strengths outweigh Berkshire's weak operating cash flow.