Each business day, TheStreet.com Ratings 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 -- 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 $500 million, lower-than-average valuations such as a price-to-sales ratio of less than 2, and leverage that is less than 49% of total capital.
In addition, they must rank near the top of all stocks rated by our proprietary quantitative model, which looks at more than 60 factors. The stocks must also be followed by at least one financial analyst who posts estimates on the Institutional Brokers' Estimate System. They are ordered by their potential to appreciate.
Note that no provision is made for off-balance-sheet assets such as unrealized appreciation/depreciation of investments, market value of real estate or contingent liabilities that might affect book value. This could be material for some companies with large, underfunded pension plans.
operates discount variety stores in the United States, under the store names Dollar Tree, Deal$ and Dollar Bills. Our
for this stock has not changed since May 2008. The rating is supported by the company's solid stock price performance, largely solid financial position, and growth in revenue, net income and earnings per share.
For the first quarter of fiscal 2009, Dollar Tree reported revenue growth of 14.2% year over year, which surpassed the industry average of 6.8%. EPS appears to have received a boost from this growth, as it improved 37.5% when compared to the same quarter a year ago. The company has demonstrated a pattern of positive EPS growth over the past two years, and we feel that this trend should continue. Net income increased 38.5% in the first quarter, rising from $43.6 million a year ago to $60.4 million. Dollar Tree's debt-to-equity ratio is very low at 0.21, which implies that the company has successfully managed its debt levels.
Management stated it that is was pleased with the first quarter results, as increased customer traffic drove earnings and sales results beyond the company's previously stated guidance. Although almost any stock may fall in an overall down market, we consider this stock to have good upside potential in most other market conditions, despite the fact that it has already risen in the past year. The company may harbor some minor weaknesses, but we feel that they are unlikely to have a significant impact on Dollar Tree's future financial results.
manufactures and markets glassware, candles, and specialty foods for the retail and foodservice markets. Our
on this stock has been in place since January 2009 and is based on the company's growth, solid stock price performance and largely solid financial position.
For the third quarter of fiscal 2009, Lancaster Colony reported revenue growth of 6.6% year over year. Although this trailed the industry average of 106.2% growth, it appears to have been enough to help boost EPS, which improved from 27 cents in the third quarter of fiscal 2008 to 76 cents in the most recent quarter. Lancaster Colony also reported significant net income growth of 145.9%. Net income increased to $21.21 million from results of $8.63 million a year ago. Strong earnings growth of 181.48% helped drive the stock up 39.43% over the past year, and should continue to move higher despite having already experienced a nice gain. A very low debt-to-equity ratio of 0.04 implies that Lancaster Colony has successfully managed its debt levels, while a quick ratio of 1.27 indicates that the company should be able to avoid short-term cash problems. One additional sign of strength for the company is the fact that its return on equity improved slightly when compared to the prior year's quarter.
Management announced that Lancaster Colony's third quarter results benefited from higher Specialty Foods volumes and operational improvements. Looking ahead to the fourth quarter, retail pricing and lower material costs are expected to boost future results, despite uncertain consumer demand. We believe that the company's low profit margins are outweighed by the strengths detailed above.
Enterprise Products Partners
is a midstream energy company that provides services to producers and consumers of natural gas, natural gas liquids, crude oil and petrochemicals in the U.S., Canada, and the Gulf of Mexico. We recently
in April 2009 based on several positive investment measures, the strongest of which is the company's expanding profit margins.
Enterprise continues to deal with the effects of Hurricanes Gustav and Ike, but posted a record gross operating margin in the first quarter of fiscal 2009 despite the lingering difficulties. At the same time, NGL, crude oil, and petrochemical transportation volumes were a record 2.2 million barrels per day. The company's gross profit margin is rather low, but it has managed to increase from the same period last year. In addition, a net profit margin of 6.6% compares favorably to the industry average.
Management considered Enterprise's first quarter results to be a good start to fiscal 2009. The stock's performance has been lackluster recently, but we feel that its strengths outweigh the potential weakness at this time.
manufactures metal and plastic consumer goods packaging products, including metal food containers, vacuum closures for food and beverage products, and high density polyethylene and polyethylene terephthalate containers for the personal care market. Our
has been in place since May 2004. The rating is based on such strengths as the company's growth, efficiency and return on equity.
For the first quarter of fiscal 2009, Silgan reported a slight drop in revenue, which does not seem to have affected the company's bottom line. EPS improved 30.9% year over year, and we feel that Silgan's recent trend of positive EPS growth should continue. Net income also improved 30.9% in the first quarter, rising from $21.16 million to $27.7 million. Although the company posted a rather low gross profit margin of 20.3%, it has managed to increase the gross profit margin when compared to the same quarter last year, and its net profit margin of 4.2% compares favorably to the industry average. In addition, return on equity improved slightly in the first quarter, rising from 22.33% to 25.71%, and can be viewed as a modest strength for the organization.
Management stated that Silgan's fiscal 2009 outlook remains, based on its first quarter results. The company reaffirmed its fiscal 2009 guidance, indicating that it expects to achieve net income per diluted share in the range of $3.75 to $3.95. Despite the company's weak operating cash flow, we feel that the strengths detailed above outweigh any potential weakness at this time.
manufactures and sells packaging products, recycled paperboard, containerboard, bleached paperboard, and merchandising displays. We have
since November 2006. This rating is based on a few notable strengths, including the company's growth and solid stock price performance.
For the second quarter of fiscal 2009, RockTenn reported significant EPS improvement when compared to the same quarter of fiscal 2008. EPS rose from 45 cents to 97 cents, continuing a trend of positive EPS growth. We feel that this trend should continue. The company also reported a notable increase in net income, which rose 118.7% from $17.1 million to $37.4 million. Earnings growth was primarily driven by strong growth in the company's Corrugated Packaging segment, whose revenue surged 57.6% in the second quarter. An additional modest sign of strength can be seen in RockTenn's return on equity, which improved slightly when compared to the prior year's quarter.
Looking ahead, management stated that RockTenn should continue to deliver strong cash flows during the rest of the fiscal year, as recycled fiber and energy costs are expected to remain low enough to offset the effects of difficult market conditions. Although the company's debt management rates poorly on most measures that we evaluated, we feel that the strengths detailed above should outweigh any weakness at this time. Furthermore, we believe that the stock has good upside potential, despite having already risen in the past year, barring an overall down market.
Family Dollar Stores
operates a chain of almost 6,000 retail discount stores in a 44-state area, providing primarily low to lower-middle income consumers with a wide range of general merchandise at highly competitive prices in convenient neighborhood stores. We have
since July 2008. The rating is based on the company's outstanding fundamentals and recession-resistant business model.
The company reported on April 8 that its revenue increased slightly in the second quarter of fiscal 2009, rising 8.7% year over year. This growth appears to have helped boost EPS, which improved 33.3% from 45 cents a year ago to 60 cents in the most recent quarter. Family Dollar's net income jumped 32.9%, increasing from $63.6 million to $84.14 million. The company's return on equity has also slightly improved from where it was a year ago. This change from 18.34% to 19.1% can be seen as a modest strength for Family Dollar.
The company feels that its second quarter successes are due not only to budget-friendly consumer behavior generated by the current economic conditions, but also by the company's own investments in the enhancement of consumer's shopping experience. Looking forward to the third quarter, the company expects an increase of 7% to 9% in its net sales, along with EPS in the range of 54 cents to 58 cents per share. While we see the company's low profit margins as a potential weakness, we believe that the strengths detailed above justify the buy rating at this time and should continue to help Family Dollar's stock to move higher despite the fact that it has already enjoyed a very nice gain of 82.7% in the past year.
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.