Each business day, 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, 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.
and its subsidiaries develop, manufacture, and market products dedicated to food and animal safety. Our buy rating for Neogen has not changed since February 2003. This rating is based on strengths like the company's robust revenue growth, impressive record of earnings per share growth and expanding margins.
For the first quarter of fiscal 2009, the company reported that its revenues, net income and EPS all represented quarterly records. Revenue growth was reported at 25.7% year over year, with revenues appearing to help boost EPS, which improved 17.2%. Net income also increased, rising 24.0% from $3.01 million in the first quarter of fiscal 2008 to $3.73 million in the most recent quarter. Neogen attributed its record results to the assimilation of recent acquisitions and significant growth in the company's primary product lines. Additionally, the company's gross profit margin is rather high at 54.70%, but Neogen has managed to decrease this number over the last year.
Neogen's sale price has not changed very much compared to where it was trading a year ago due to the relatively weak overall performance of the market and the company's recent mixed results. However, it is currently trading at a price that is somewhat expensive compared to the rest of its industry. Due to the strengths detailed here and a lack of significant weaknesses, we feel that higher price level is justified at this time.
( RAH) is a Missouri-based company that manufactures, distributes, and markets store-brand (private label) food products in the grocery, mass merchandise, drug, and foodservice channels. Ralcorp has been rated a buy since February 2004. This rating is based on the company's strong revenue growth and higher earnings, along with its improved returns and solid debt management during the third quarter of fiscal 2008.
The company reported that its net sales in 12.9% year over year in the third quarter of fiscal 2008 due to volume gains across all segments and higher pricing in response to rising input costs. As a result of the sales gain, Ralcorp's earnings quadrupled to $45.80 million from $11.60 million in the third quarter of fiscal 2007. Strong fundamentals are another positive for this company, with cash balances surging from $55.90 million to $85.30 million, net operating cash flow increasing 20.7%, and a total debt decreasing 13.4%. Return on equity and return on assets improved 1,497 and 542 basis points, respectively. In addition, Ralcorp recently completed a merger with Kraft Food's Post cereals business for $2.60 billion.
The company's gross profit margin and operating margin deteriorated 145 and 83 basis points, respectively, as a result of rising raw material costs and transportation expenses. The company also appears to have a weak liquidity position, given its quick ratio of 0.69. Bear in mind that any failure to integrate recent acquisitions could hinder Ralcorp's future performance.
provides technologies and solutions for mission-critical national security programs for the intelligence community, the space community, and various departments and agencies of the U.S. federal government. ManTech has been rated a buy since March 2005. Our rating is based on strengths such as the company's robust revenue growth, largely solid financial position and record of EPS growth.
For the third quarter of fiscal 2008, revenue rose by 26.8% year ove ryear. This increase was primarily the result of a business strategy focused on high-end defense and intelligence markets supporting U.S. national security. Revenue growth appears to have helped boost earnings per share, which improved 31.4% when compared to the same quarter a year ago. The EPS increase from 51 cents to 67 cents represents the continuation of a pattern of positive EPS growth demonstrated by ManTech over the past two years, a trend which we feel should continue. Net income also increased in the third quarter, rising from $17.48 million in the third quarter of fiscal 2007 to $23.86 million in the most recent quarter. ManTech's very low debt-to-equity ratio of 0.007 and quick ratio of 1.42 illustrate the company's successful management of debt levels and ability to avoid short-term cash problems.
Management announced it was pleased with the third quarter results, as strong performance and excellent cash flow helped provide necessary flexibility in a challenging economic environment. Based on strong business momentum in its national security and defense business, the company set EPS guidance at 67 cents to 70 cnents for the fourth quarter and $2.53 to $2.56 for full-year fiscal 2008. These ranges represent 10% to 15% growth over the fourth quarter of fiscal 2007 and 30% to 31% growth over full-year fiscal 2007. The company currently shows low profit margins, but we feel that the strengths detailed above outweigh any potential weakness.
and its subsidiaries lend or provide credit services to individuals who do not have cash resources or access to credit to meet their short-term cash needs. EZCorp has been rated a buy since January 2004.
For the fourth quarter of fiscal 2008, the company announced total revenue growth of 19% year over year. The company experienced its twenty-fifth consecutive quarter of year-over-year earnings growth, with net income increasing 44% and EPS improving significantly from $0.26 in the fourth quarter of fiscal 2007 to $0.37 in the most recent quarter. The unfavorable impact of lost store days due to Hurricane Ike and the favorable impact of foreign tax credit utilization were excluded from the EPS results, with results instead being primarily driven by the company's pawn operations in the U.S. and Mexico, according to management.
Looking ahead, the company has completed due diligence on two acquisition opportunities and will move ahead with the acquisitions of Pawn Plus and Value Financial Services. The Pawn Plus transaction, which will add 11 stores to EZCorp's portfolio, is expected to be complete in late November, while the Value Financial Services acquisition should be completed in the latter half of December. In addition, the company has plans to open 30 to 35 EZMoney locations in the U.S. and 30 to 35 Empeno Facil locations in Mexico, while monitoring regulations in Canada to look for opportunities to enter the market in provinces that adopt acceptable payday loan regulations.
, which does business as 1-800-PetMeds, markets and sells prescription and non-prescription pet medications, along with other health products for dogs, cats and horses.
We have rated PetMed Express a buy since November 2004 due to such strengths as its solid stock price performance, growth in net income and revenue, and largely solid financial position. The company announced on October 20 that its revenue rose 15.6% year over year in the second quarter of fiscal 2008. This growth helped lead to EPS growth of 38.9% when compared to the same quarter last year. The company has, in fact, demonstrated a pattern of positive EPS growth over the past two years, and we feel that this trend should continue. Net income also improved in the second quarter, rising 28.6% from $4.53 million in the second quarter of fiscal 2007 to $5.82 million in the most recent quarter. Strong earnings growth was key to helping drive the stock price higher over the last year, although other factors naturally played a role, as well. In addition, PetMed Express has no debt to speak of and a quick ratio of 5.53, factors which indicate the successful management of debt levels and the ability to cover short-term cash needs.
Management announced that it was pleased that its efforts to reduce operating expenses as a percentage of sales helped lead the company to a highly profitable second quarter. Looking ahead, PetMed Express plans to focus on capturing additional market share, as well as improving reorders and customer service levels. Although no company is perfect, we do not currently see any significant weaknesses that are likely to detract from the future financial performance of this company.
Our quantitative rating 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.
This article was written by a staff member of TheStreet.com Ratings.