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, all-around value stocks are in the spotlight. 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. These stocks 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 it 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 improvement and compelling results 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., and has been rated a buy since April 2005. It has displayed strong revenue growth, increased return on equity -- despite margin pressure -- and significantly improved net operating cash flow. These strengths outweigh the company's low profit margins.
As a result of its business model, the company is at risk to a number of factors outside its control, such as rising fuel costs, network flow, price competition and safety. Additionally, weakness in the housing and automotive sectors remain areas of concern.
, rated a buy since March 2005, designs, manufactures, distributes and repairs diesel and natural gas engines and electric power generation systems. The company shows steady revenue growth and a low debt-to-equity ratio. It also recently announced plans to enter the light-duty diesel market in the U.S. and China, and launched a joint venture to make engines with Beijing-based Beiqi Foton Motor Company. Cummins distributed a two-for-one stock split on April 9, 2007.
Because Cummins operates in various competitive markets, the buy rating depends on the economic conditions of the automotive, construction and general industrial sectors. Growth prospects would likewise be dimmed by any decline in margins or return on equity.
Rio de Janeiro-based
has had a buy rating since March 2005. The company's strengths include stellar revenue growth, a steady pattern of EPS growth, improved return on equity and impressive increases on net operating cash flow.
Though Petrobras might have a few minor weaknesses, these are unlikely to have a significant impact on results.
Crude and natural gas explorer
has been rated a buy since March 2005. It has shown stock price appreciation and improvement on its low profit margin.
These strengths outweigh the company's subpar net income growth.