TSC Ratings TheStreet.com Ratings provides exclusive stock, ETF and mutual fund ratings and commentary based on award-winning, proprietary tools. Its "safety first" approach to investing aims to reduce risk while seeking solid outperformance on a total return basis.
Each business day, we compile a list of the top five stocks in one of five categories -- fast-growth, all-around value, large-cap, mid-cap and small-cap -- and publish these lists in the Ratings section of our website.
Today, fast-growth stocks are in the spotlight. These are stocks of companies that are projected to increase revenue and profit by at least 12% in the coming year and rank near the top all stocks rated by our proprietary quantitative model, which looks at over 60 factors.
In addition, the stocks must be followed by at least one financial analyst who posts estimates on the Institutional Brokers' Estimate System. Please note that definitions of revenue vary by industry, and this screen does not make adjustments for acquisitions, which can materially affect posted results. Likewise, earnings-per-share growth may be affected by accounting charges, share repurchases and other one-time items.
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.
is an Israeli-based company that develops, produces and markets a range of generic and branded pharmaceuticals, biogenerics and active pharmaceutical ingredients. It ranks among the world's largest generic drug companies. Teva's stock has been rated a buy since August 2006 on the basis of its expanding profit margins and growth in revenue, net income and earnings per share.
For the first quarter of fiscal 2009, the company reported revenue growth of 22.4% year over year, which surpassed the industry average of 5.9% growth. This growth seems to have helped boost EPS, which improved to 51 cents from 18 cents in the prior year's quarter. The company has reported somewhat volatile earnings recently, but we believe that it is poised for EPS growth in the coming year. Net income surged 224.5% in the first quarter, rising from $139 million to $451 million. We consider Teva's gross profit margin of 49.9% to be strong.
Management considered Teva's first-quarter results to be strong, with growth across the company's various businesses and geographies, and therefore is optimistic about the remainder of fiscal 2009. Although Teva's stock has shown lackluster performance recently, we feel that the strengths detailed above should outweigh any potential weakness at this time.
is a provider of information technology services and solutions to U.S. federal government agencies. The company focuses on designing, implementing, maintaining and upgrading IT systems and networks. NCI has been
since February 2008 based on its healthy growth in revenue and net income, solid stock price performance, impressive record of EPS growth and largely solid financial position.
For the first quarter of fiscal 2009, NCI reported revenue growth of 14.8% year over year, which was higher than the industry average of 1.4%. This growth appears to have trickled down to the company's bottom line, as EPS improved 25.9% compared with the same quarter a year ago. We feel that NCI's two-year trend of positive EPS growth should continue. The company also reported increased net income, which rose 28.8% from $3.63 million to $4.68 million. An additional strength is the company's debt-to-equity ratio of 0.29, which is below the industry average and indicates successful management of debt levels. To add to this, NCI has a quick ratio of 1.55, demonstrating an ability to cover short-term liquidity needs.
Management was pleased with what it considered solid results for the first quarter. Looking ahead, the company announced expectations of diluted EPS in the range of 34 cents to 36 cents for the second quarter and $1.44 to $1.52 for full-year fiscal 2009. The stock has risen 35.77% over the past year, and we feel that the stock should continue to move higher on the strength of the positive factors detailed above, despite its low profit margins. Bear in mind, however, that almost any stock can fall in a broad market decline.
develops and markets health care information systems that automate medical and dental practices, networks of practices such as physician hospital organizations, ambulatory care centers, community health centers and medical and dental schools. We have
since November 2001 due to its efficiency, solvency and growth in revenue and net income. Solid stock price performance also supports this rating.
For the fourth quarter of fiscal 2009, the company reported that its revenues rose 28.4% year over year, surpassing the industry average of 2.8% growth. Net income also increased in the fourth quarter, rising 1.3% from $11.25 million to $11.4 million. The company has reported somewhat volatile earnings recently, but we feel that it is poised for earnings per share growth in the coming year.
Compared with a year ago, Quality Systems' stock price has jumped 50.5%, exceeding the performance of the broader market during that time frame. Although this increase has driven the stock to a level that is relatively expensive compared to the rest of the industry, we feel that the company's strengths justify the higher price level at this time. While no company is perfect, we do not currently see any significant weaknesses that are likely to detract from the generally positive outlook for this company.
is a for-profit post-secondary education services corporation that offers a variety of academic programs through wholly-owned Strayer University. Our
for Strayer has not changed since March 2003 and is based on a variety of strengths that include the company's growth and its favorable returns, along with a surge in enrollment and a largely solid financial position.
For the first quarter of fiscal 2009, Strayer's revenue growth of 28.2% year over year slightly outpaced the industry average growth of 19.9%. This growth was driven by increased student enrollments and a 5% increase in tuition fees since January 2009. Revenue growth seems to have helped expand the company's bottom line, as earnings per share improved 26.2% compared with the same quarter last year. Net income also increased, rising to $29.05 million from $23.52 million a year ago. Strayer's gross profit margin improvement of 128 basis points is a further sign of strength. Higher earnings combined with a lower asset and equity base to help drive returns on assets and equity higher in the first quarter. Stayer has no debt to speak of, giving it a debt-to-equity ratio of zero, which we consider to be a favorable sign. In addition, a quick ratio of 1.47 indicates that the company should be able to avoid short-term cash problems.
Management stated that it was pleased with Strayer's first quarter financial performance and the strong student enrollment for the spring term. Strayer announced that its first-quarter revenue and earnings results were records for the company. However, the company faces challenges from a deteriorating cash balance. In addition, the company incurred higher costs related to support the increase in student enrollments and building the Strayer University brand, and these costs could restrict the company's financial performance going forward. Finally, the company's stock is trading at a premium valuation, but we feel that the strengths detailed above justify the higher price point at this time.
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 have
since December 2008. This rating is supported by several positive factors, including its growth, notable return on equity and good cash flow from operations.
For the first quarter of fiscal 2009, Medco reported revenue growth of 14.4% year over year, which beat the industry average of 1.1%. EPS apparently benefitted from this growth, improving 16% when compared to the same quarter of last year. We feel that the company's trend of positive EPS growth should continue. Net income also increased, rising 7.7% from $270.2 million to $291 million. Medco's net operating cash flow increased 607.12% over the prior year's quarter and surpassed the industry average cash flow growth rate of 52.06%. An additional modest strength for the company is its return on equity, which improved slightly when compared to the first quarter of last year.
Management attributed the company's first quarter results to its success in growing its top and bottom lines, and cited the company's strength in winning new business, as well. The company reaffirmed its full-year guidance for fiscal 2009, indicating that it anticipates GAAP diluted EPS in the range of $2.45 to $2.55. Medco shows low profit margins, but we feel that this potential weakness is outweighed by the strengths detailed above.
TheStreet.com Ratings, recently cited for Best Stock Selection from October 2007 through February 2009 , is an independent research provider that combines fundamental and technical analysis to offer investors tremendous value in volatile times. To see how your portfolio can use this research, click here now!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.