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 more than $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 also must 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 still makes trucks, buses, construction equipment and aircraft-engine parts. It has been rated a buy since February 2005.
The company is poised to benefit from its focus on the Asian commercial-vehicle market and, with construction booming worldwide, is positioned to repeat its solid financial results of its record fiscal year 2006. Last year, Volvo enjoyed outstanding revenue growth, net income increases, lower expense interest and impressive EPS growth.
Volvo's business would be hurt by any slowdown in global economic growth or industrial production, as well as the continued escalation of raw-material costs. Additionally, we expect global demand for trucks to slow in 2007 as a result of buying in 2006 due to new emissions standards.
Rated a buy since February 2005,
manufactures steel products, with facilities in 13 states. It produces carbon and alloy-steel building materials and also is a recycler. The company has had strong financial performance driven by higher volume and exceptional returns to shareholders. The company is also poised to benefit from a recent increase in steel demand and the acquisition of Harris Steel Group.
The principal risk to our rating could come from continued steel imports into the U.S. market, which could result in an inventory glut and hurt realizations. Also, when combined with any unexpected increase in steel scrap costs, this could hurt the company's operating margin.
has been rated a buy since February 2005 and is the owner of one of the largest rail networks in the U.S. It has displayed compelling improvements in its top line and continued momentum in its surface transportation business, reflecting better operating limits in its fiscal year 2006. Growth in the agricultural market, demand for coal exports and continued growth in imports offset the soft housing and automotive sectors.
Potential threats to the buy rating include continued weaknesses in the housing market and the automotive markets, as well as lower profit margins.
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 fact that it has shown low profit margins.
has chugged along with a buy rating since February 2005. The company has shown a wide range of strengths, including revenue growth, significant EPS improvements and net income growth that has towered over its industry peers.
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 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 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.
Hartford Financial Services
provides a wide range of insurance products, and has been rated a buy since February 2005. The company shows a nicely diversified business portfolio, and favorable industry trends are expected to continue moving its financial performance forward.
Risks to the buy rating include the possibility of interest rate changes or poor equity performance. Pressure on premium rates from competition, or any unexpected catastrophic changes, are other concerns.
, a fully integrated gas and electric holding company, has merited a buy rating since November 2004. Its EPS growth and increase in stock price during the 12-month period ended 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.
Rated a buy since January 2005,
manufactures and distributes trucks and related parts and provides financing and leasing services to customers and dealers. The company markets its trucks under the Peterbilt, Kenworth and DAF brands. Its strengths include record financial performance and impressive returns to shareholders.
Paccar's strengths are seen in a convergence of positive investment measures, including robust revenue growth, notable return on equity, impressive net operating cash flow growth, and compelling growth in net income.
These strengths outweigh the company's low profit margins.
-- rated a buy since February 2005 -- generates, distributes and sells electricity to some 4.5 million customers in Ohio, New Jersey and Pennsylvania. The company is increasing its power generation capacity, which it expects to bolster its financial performance. Also, FirstEnergy has cost advantage over its competitors, as it generates electricity using less-expensive nuclear power and coal, while its competitors use oil and gas.
However, the company is exposed to risks from the reliability of its power plants and transmission and distribution equipment, along with health and safety hazards of its nuclear plants. Also, it could be significantly affected by any increase in interest rates or prices for commodities such as natural gas or coal.