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 with 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. They also rank near the top 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 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.
, 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 positive EPS growth.
It also recently announced plans to enter the light-duty diesel market in the U.S. and China, and it launched a joint venture to make engines with Beijing-based Beiqi Foton Motor Company. Cummins distributed a 2-for-1 stock split on April 9.
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.
Although Petrobras might have a few minor weaknesses, these are unlikely to have a significant impact on results.
Rated a buy since March 2005,
is a chemical company with a product range the includes chemicals, plastics, coatings systems, dispersions, agricultural products and fine chemicals, as well as crude oil and natural gas.
The company demonstrates robust revenue growth, solid stock price performance, a pattern of positive EPS growth over the past two years and net income growth that has significantly exceeded that of the
and the chemicals industry.
While no company is perfect, BASF currently does not show any significant weaknesses likely to detract from the generally positive outlook.
has chugged along with a buy rating since April 2005. The company has shown a wide range of strengths, including revenue growth, significant EPS improvement and noteworthy net income growth.
Its recent initiatives to improve its rail network and operating efficiencies, together with strong demand for coal shipments from the Powder River Basin in Wyoming, could drive its growth in the near term.
Since Union Pacific's business is cyclical in nature, it is quite sensitive to changes in economic conditions. Severe weather conditions, currency volatility and higher-than-expected fuel prices could have an adverse impact on its performance.