Three Stocks Being Unfairly Punished - TheStreet

Three Stocks Being Unfairly Punished

Growth-style stocks have been battered in the stock-market decline of 2010. But these three companies score highly in our review.
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BOSTON (TheStreet) -- The S&P 500 Index, after surging more than 68% between early March and the end of last year, has fallen 7.5% in the past five weeks, dragged down by growth-style stocks.

Now's the time to assess which of those are being unfairly chastised.

Here are three mid-cap stocks from varied industries with common attributes: Each has fallen from a 52-week high, possesses a low PEG ratio (showing value compared with expected growth), and increased sales and profits during the past year, providing a margin of safety. The stocks are ordered by their overall score,

TheStreet.com's

gauge of a stock's risk-adjusted value, from worst to best.

3.

Bucyrus International

(BUCY)

manufactures mining equipment.

Overall Score

: 6 out of 10

PEG Ratio

: 0.5 versus an industry average of 5.5

Quarterly Return on Equity

: 24% versus an industry average of 7%

1-Year Stock Performance

: +235%, -18% over the past month

3-Year Annualized Sales Growth Rate

: 57%

Bucyrus is scheduled to report fourth-quarter results Feb. 18. Third-quarter profit increased 43% to $92 million, or $1.21 a share, as revenue grew 4.6% to $676 million. The company's gross margin widened from 30% to 35%, and its operating margin stretched from 16% to 21%. Bucyrus holds $144 million of cash, translating to a quick ratio of 1.3. Its 0.4 debt-to-equity ratio is less than the industry average, indicating restrained leverage.

2.

Estee Lauder

(EL) - Get Report

sells cosmetics and personal products.

Overall Score

: 6.1 out of 10

PEG Ratio

: 0.2 versus an industry average of 0.7

Quarterly Return on Equity

: 21% versus an industry average of 27%

1-Year Stock Performance

: +114%, +16% over the past month

3-Year Annualized Sales Growth Rate

: 3.5%

Estee Lauder's fiscal second-quarter profit soared 62% to $256 million, or $1.28 a share, as revenue climbed 10% to $2.3 billion, helped by emerging-markets sales. The company's gross margin inched up from 78% to 79%, but its operating margin extended from 13% to 20%. Estee Lauder holds $1.2 billion of cash, equating to a quick ratio of 1.4, and $1.4 billion of debt. Its 0.7 debt-to-equity ratio is less than the industry average.

1.

Western Digital

(WDC) - Get Report

makes hard-drives.

Overall Score

: 6.8 out of 10

PEG Ratio

: 0.1 versus an industry average of 0.5

Quarterly Return on Equity

: 24% versus an industry average of 36%

1-Year Stock Performance

: +130%, -14% over the past month

3-Year Annualized Sales Growth Rate

: 19%

Western Digital's fiscal second-quarter profit multiplied thirty-fold to $429 million, or $1.85 a share, as revenue surged 44% to $2.6 billion. The company's gross margin improved from 23% to 31%, and its operating margin rose from 6.7% to 18%. Western Digital holds $2.4 billion of cash and $444 million of debt, giving its balance sheet a liquid tilt. Its 0.1 debt-to-equity ratio is less than the industry average.

-- Reported by Jake Lynch in Boston.