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.
Medco Health Solutions
is one of the nation's largest pharmacy benefit managers, providing sophisticated traditional and specialty pharmacy benefit programs and services for clients, members of client-funded benefit plans, and individual patients. We upgraded Medco to a
in December 2008, based on such strengths as its growth, efficiency, and solvency.
The company reported its results for the fourth quarter of fiscal 2008 on Feb. 24. The company reported revenue growth of 15% year over year in the third quarter, boosted in part by record specialty pharmacy revenues of over $2.0 billion. This growth appears to have helped boost earnings per share, which improved 48.7% when compared to the same quarter a year ago. Net income also increased, rising 37.7% from $214.9 million to $295.7 million over the past year. We are encouraged by a trend of positive EPS over the past two years. Net operating cash flow surged 327.3% in the third quarter. In addition, a debt-to-equity ratio of 0.8 implies that Medco has been somewhat successful at managing its debt levels, although a relatively weak quick ratio of 0.8 shows the potential for future problems in this area.
The company reaffirmed its guidance for full-year 2008, including GAAP diluted EPS of $2.10 to $2.13 and diluted EPS of $2.30 to $2.33. For full-year 2009, Medco anticipated diluted EPS in the range of $2.67 to $2.77. The stock itself has had lackluster performance recently, but we feel that the strengths detailed above outweigh this weakness.
is a publicly traded international oil and gas company. Our
for ExxonMobil has not changed since January 2004. The company's largely solid financial position and notable return on equity have contributed to this rating.
For the fourth quarter of fiscal 2008 the Exxon Mobil reported that a 29.1% decline in revenue when compared to the same quarter a year ago, along with a 27.2% drop in EPS and a 32.9% decrease in net income. However, we are encouraged by a low debt-to-equity ratio of 0.1, which implies that ExxonMobil has successfully managed its debt. In addition, current ROE exceeded that of the prior year's quarter, a fact that can be seen as a clear sign of strength for the company.
Management stated that the company was financially strong and that its capital investments demonstrate the company's long-term focus. Although the stock itself as shown lackluster performance of late, we feel that the strengths detailed above outweigh any potential weakness at this time.
operates retail stores worldwide. The company began with a single discount store in 1962 and now operates approximately 7,390 Wal-Mart and Sam's Club stores in 14 markets. Our
for Wal-Mart has been in place since February 2008. This rating is based on a variety of strengths, including the company's attractive valuation levels, good cash flow from operations, revenue growth and solid stock price performance.
For the fourth quarter of fiscal 2008, the company reported that its revenue increased slightly, rising 1.6% year over year. Although diluted EPS came in higher than the company's most recent guidance, an overall decline in EPS indicates that the revenue increase did not trickle down to the bottom line. However, return on equity improved slightly when compared to the same quarter one year ago, and net operating cash flow increased 18.7%. Although Wal-Mart's stock price has not changed much over the past year, we feel that the stock has good upside potential at this time.
Management announced that the company's $108 billion in fourth-quarter sales was its strongest sales result ever, and stated that the company remains well-positioned for the future due to its pricing. Although Wal-Mart shows low profit margins, we believe that the strengths detailed above outweigh any potential weaknesses 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 upgraded it
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.
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 upgraded ADM
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 $472.00 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 169.3% 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.
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.