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 62 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 still makes trucks, buses, construction equipment and aircraft engine parts. It has been rated a buy since March 2005.
The company has shown stellar revenue growth, solid stock price performance, outstanding EPS growth and compelling growth in net income. These strengths outweigh the company's low profit margins.
is the owner of one of the largest rail networks in the U.S.; it has been rated a buy since March 2005. It has displayed strong revenue growth, impressive EPS increases and significantly improved net operating cash flow.
These strengths outweigh the company's low profit margins.
is involved in every aspect of crude oil and natural gas, from exploration to distribution. It has been rated a buy since March 2005. The company has shown impressive revenue growth, increased net income and improved return on equity, and it is focused on expanding its oil and gas production capacity in response to high crude oil prices.
Risks to the buy rating include any unexpected sharp downturn in oil and gas prices that would not only cause a drag on its profits but could render several of its recent expansion plans unviable.
Insurance and financial services company
has merited a buy rating since March 2005. With a strong market position and favorable industry trends, the company is positioned for continued strong financial performance.
MetLife has bolstered its market position in the core insurance and annuity business with its acquisition of Travelers Insurance Company and the completion of a distribution agreement with
in 2005, giving it one of the broadest distribution networks in the sector. Ongoing consolidation within the industry will lead to sustained growth. Risks include the negative impact of any changes in interest rates, equity prices and any slowdown of the economy.
Possible risks to the buy rating include any sharp fluctuation in equity markets, a decline in investment spreads, negative competitive effects on premium rates, adverse regulatory developments or any unexpected catastrophic event.
Crude and natural gas explorer
has been rated a buy since March 2005. It has shown strong stock price appreciation and improvement on its low profit margin.
These strengths outweigh the company's subpar net income growth.
Hartford Financial Services
provides a wide range of insurance products, and has been rated a buy since March 2005. The company shows significant EPS growth, a return on equity that has remained above that of its peers over the past three years and well-diversified revenue streams. The Hartford has favorable growth prospects due to factors such as an aging population, longer life expectancies and an encouraging employment factors.
Risks include the possibility of interest rate changes, poor equity performance, any pressure on premium rates resulting from competition or any unexpected catastrophic events.
provides natural gas service throughout Southern California and portions of central California. It has been rated a buy since March 2005. The company's strengths include its solid stock price performance, dramatic increases in net operating cash flow and a debt-to-equity ratio lower than that of the industry average.
With strengths such as these, the company's subpar net income growth is no cause for concern.
has chugged along with a buy rating since March 2005. The company has shown a wide range of strengths, including revenue growth, significant EPS improvements and net income growth that has towered over that of its industry peers.
The company's low profit margins pose 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 its low profit margins.
Oil and natural gas company
has been rated a buy since March 2005. Its rating is based on the company's increased volume production, improved margins and higher operating cash flow.
Since ConocoPhillips's performance is so dependent on achieving its upstream, or exploration-and-production, targets, any downturn in that sector would adversely affect its results. In the coming months, OPEC production quota reductions affecting Venezuela and Libya are expected to reduce the production volume.