Each business day, TheStreet.com Ratings TheStreet.com Ratings compiles a list of the top five stocks in one of five categories -- fast-growth, all-around value, large-cap, mid-cap and small-cap -- 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 more than $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 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.
provides wireless telecommunications services in Japan. We have
since February 2008. This rating is supported by a variety of strengths, such as the company's solid stock price performance, impressive record of earnings per share growth, and largely solid financial position.
The company reported in October that its earnings surged 40% year over year in the second quarter of fiscal 2008 due to lower costs as a result of a reduction in handset incentives. EPS improved 44.4% from 27 cents a year ago to 39 cents, continuing a trend of positive EPS growth over the past year. Return on equity exceeded that of the prior year's quarter, rising from 9.3% to 14.4%. This is a clear sign of strength within the company. In addition, the company's very low debt-to-equity ratio of 0.1 is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with this, a quick ratio of 1.3 indicates that NTT DoCoMo has the ability to avoid short-term cash problems. Bear in mind, however, that the company reported its third quarter earnings on Jan. 30, so our rating is subject to change once these numbers are finalized within our model.
The mobile operations market in Japan is becoming increasingly competitive, due to such factors as price competition and market entry by new businesses. The company has taken these market conditions into account in setting guidance for the fiscal year ending March 2009. Currently, it expects net income of Yen 495 billion on operating revenue of Yen 4,597 billion. Although even the best stocks can fall in an overall down market, we feel that this stock has good upside potential in almost any other market environment. In addition, we feel that its strength outweigh the fact that it currently shows weak operating cash flow.
is an industry leader in defense and government electronics, space, technical services, and business and special mission aircraft. We have
since October 2004 because of such strengths as its revenue growth, attractive valuation levels, largely solid financial position, and notable return on equity.
For the fourth quarter of 2008, Raytheon reported only slight revenue growth of 1.4% year over year, and this revenue growth does not appear to have trickled down to the bottom line. However, the company has a very low debt-to-equity ratio, and its return on equity has improved slightly when compared to the same quarter a year ago. In addition, the company's fourth quarter sales increased 1.4%, while full year sales improved 9% in fiscal 2008.
Looking ahead to fiscal 2009, Raytheon reaffirmed its 2009 guidance on the basis of what management felt were successful results for fiscal 2008. The company expects net sales in the range of $24.3 billion to $24.8 billion, with full-year EPS anticipated in the range of $4.45 to $4.60 per share. Although the company's stock has shown somewhat lackluster performance recently, we feel that its strengths outweigh any potential weakness at this time.
owns and operates Florida Power & Light Company, supplying electric service to a population of more than eight million throughout most of the east and lower west coasts of Florida. We had previously rated FPL Group a hold, but
on Jan. 8. This rating is supported by the company's revenue growth, increase in net income, improved EPS, and good cash flow from operations. FPL's notable return on equity also contributes to this rating.
For the fourth quarter of fiscal 2008, the company's revenue growth of 8.7% year over year was higher than the industry average of 3.4%. This growth was driven by a 39.5% increase in NextEra Resources revenue. Boosted by this revenue growth, the company's EPS improved significantly when compared to the same quarter last year, rising from 56 cents to $1.01. Net income surged 81.7% from $224 million to $407 million.
Looking ahead, management expects its full year 2009 adjusted earnings to be in the range of $4.05 and $4.25 per share. Although the company has demonstrated generally poor debt management based on most measures that we evaluated, we feel that the strengths detailed above outweigh any potential weakness at this time.
Archer Daniels Midland
is an agricultural processor that produces food ingredients, animal feeds and feed ingredients, biofuels, and other products from crops such as corn, oilseeds, wheat and cocoa. These crops are used by manufacturers worldwide to produce food products. We recently
in December 2008, based on the increases in revenue and net income, notable return on equity, attractive valuation levels, and good cash flow from operations.
For the second quarter of fiscal 2009, ADM's revenue increased slightly by 1.1% year over year. The company reported 23.9% growth in net income, which was positively impacted by changes in LIFO inventory valuations and higher revenue. Net income increased from $472 million in the second quarter of fiscal 2008 to $585 million in the most recent quarter. EPS seems to have been boosted by ADM's revenue growth, rising from 73 cents to 91 cents per share. Return on equity also improved slightly in the second quarter and can therefore be construed as a modest strength for the organization. In addition, net operating cash flow significantly increased by 169.29% when compared to the same quarter last year.
Looking ahead, management hopes to build long-term shareholder value by strengthening and growing ADM's value chain. Although the stock's performance has not been exceptional of late, we feel that the strengths detailed above outweigh any potential weakness at this time.
provides broadband and other wireline and wireless communication services in the United States and internationally. Verizon has been
since May 2008. Our rating is driven by such strengths as the company's growth in revenue, net income and EPS, as well as its expanding profit margins and notable return on equity.
For the fourth quarter of fiscal 2008, Verizon reported year-over-year revenue growth of 3.4%. This growth appears to have trickled down to the company's bottom line, as EPS improved by 16.2% in the most recent quarter. The company has demonstrated a pattern of EPS growth over the past year, and we believe that this trend is likely to continue. Net income also increased in the fourth quarter, rising 15.2% when compared to the same quarter a year ago. In addition, Verizon's return on equity improved slightly and can be considered a moderate strength for the company.
Management stated that Verizon's fourth quarter and year end results demonstrated the company's ability to compete effectively in the current economic climate. Although the company's operating cash flow is currently rather weak, we feel that the company's strengths justify the buy rating at this time.
Our quantitative rating, which can be viewed for any stock through our stock screener stock rating screener, is based on a variety of historical fundamental and pricing data and represents our opinion of a stock's risk-adjusted performance relative to other stocks. However, the rating does not incorporate all of the factors that can alter a stock's performance. For example, it doesn't always factor in recent corporate or industry events that could affect the stock price, nor does it include recent technology developments and competitive dynamics that may affect the company.For those reasons, we believe that a rating alone cannot tell the whole story and that it should be part of an investor's overall research.