Skip to main content Ratings: Top 10 Large-Cap Stocks

Precision Castparts, CSX and Allegheny Technologies head up this week's list of top-rated companies.

Each weekday, 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 large-cap stocks. These are stocks of companies with market capitalizations of more than $10 billion that rank near the top of all stocks rated by our proprietary quantitative model, which looks at more than 60 factors.

In addition, the stocks must be followed by at least one financial analyst who posts estimates on the Institutional Brokers' Estimate System. The stocks are ordered by their potential to appreciate.

Today begins with

Precision Castparts


, a manufacturer of complex metal components and products for the aerospace and industrial gas turbine industries. It has been rated a buy since March 2005.

The company has completed recent acquisitions to expand its casting, forging and fastener products offerings, thus fueling revenue growth. Precision also has strong cash flow that has enabled it to repay debt while maintaining its dividend payout.

Since Precision is dependent on the aerospace industry for its top-line growth, a slowdown there could lead to reduced demand for its products. Any fluctuations in the prices of basic materials or any unseen difficulty integrating recent acquisitions could also be concerns.


(CSX) - Get Free Report

is the owner of one of the largest rail networks in the U.S, and 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 profits outweigh the company's low profit margins.

Allegheny Technologies

(ATI) - Get Free Report

has been rated a buy since July 2005. The company produces specialty materials, including super stainless steel, nickel- and cobalt-based alloys and other metals. The company displayed strong top-line performance, increased margins and maintained bottom-line expansion and reasonable debt levels.

Allegheny's future performance relies on continued growth opportunities for specialty metals from key markets, sustained cost reductions and the cost of raw material for key metals. Risks include an expected slowdown in demand for stainless products due to record-high nickel costs.

Telephone titan


(T) - Get Free Report

has rung up a buy rating since March 2006. This is based on a number of positive investment measures, including robust revenue growth, net income growth and notable cash flow.

The company's growth has been driven by acquisitions. The completion of the BellSouth acquisition will generate higher cash flow, and AT&T expects its wireless segment, which now includes all Cingular and BellSouth businesses, to deliver double-digit earnings growth in 2007.

Risks to the buy rating include stiff competition from wireline and cable operators, merger-related challenges and a decline in return on equity, all of which could restrict the company's growth prospects.

Department store retailer


(JWN) - Get Free Report

has had a buy rating since March 2005. Positives include a notable return on equity, a very low debt-to-equity ratio, increased net operating cash flow and expanding profit margins. Revenue growth was 14.4%, which significantly outpaced the industry average of 5.4% for the most recent quarter.

Though no company is flawless, there are currently no major weaknesses likely to detract from its largely positive outlook.



(MAR) - Get Free Report

has earned a buy rating since March 2005. The company's strengths include solid stock price performance, increased net operating cash flow and a low debt-to-equity ratio.

These strengths outweigh the company's subpar net income growth.


(DHR) - Get Free Report

-- a buy since March 2005 -- designs, manufactures and markets industrial and consumer products. The company operates in four segments: professional instrumentation, medical technologies, industrial technologies and tools and components. Danaher's cost-cutting measures and 11 acquisitions in 2006 created strong core revenue growth, net income growth and expanding profit margins.

Downside risks include any negative effects from the cost-cutting programs and any adverse changes in governmental relations. In addition, during the recent quarter, the company's debt-to-equity ratio rose while its return on equity and return on assets declined. If this trend continues, it could hurt future performance.


(GRMN) - Get Free Report

, which makes navigation, communications and information devices based on GPS technology, has been rated a buy since March 2005. The company has shown stellar revenue growth, notable return on equity, a two-year pattern of steady EPS growth, and is carrying no debt.

Though no company is perfect, we do not currently see any weaknesses that are likely to detract from the generally rosy outlook.

Rated a buy since March 2005,

Rockwell Collins


provides design, production and support of communications and aviation electronics for military and commercial customers. The company has shown improved net income growth, strong EPS growth, increased net operating cash flow and reasonable debt levels by most measures.

Given its other strengths, the company's low profit margins are no threat to its buy rating.

General Dynamics

(GD) - Get Free Report

, a defense contractor whose primary customer is the U.S. government, has been rated a buy since February 2005. The company has flourished thanks to higher defense spending worldwide, which contributed to strong revenue growth mainly from increased demand for tanks, armored vehicles and business jets used by the U.S. military. It has also seen an improved backlog, expanded margins and increased net income.

Possible risks to the buy rating include General Dynamics' dependence on government spending and the costs associated with its numerous acquisitions (43 since 1995). Also, its presence in the civil aircraft market leaves it vulnerable to fluctuations in demand for business jets and aviation services.