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.
is a biopharmaceutical company that engages in the research, development and commercialization of pharmaceutical products for the anti-infective market. We upgraded Cubist from a hold to a buy on Oct. 17. Our rating is supported by a number of strengths, such as its robust revenue growth, solid stock price performance, and expanding profit margins. Growth in net income and earnings per share also contribute to the company's strengths.
The company reported 40.9% year over year revenue growth in the third quarter of fiscal 2008, contributing to an EPS improvement of 37.5%. EPS climbed from 32 cents in the third quarter of fiscal 2008 to 44 cents in the most recent quarter. The company has, in fact, demonstrated a pattern of positive EPS growth over the past two years, and we feel that this trend is likely to continue. Net income also increased in the third quarter, increasing 39.5% from where it was a year ago. Although Cubist's gross profit margin is very high at 79.1%, it has managed to decrease that result compared to the prior year's quarter. In addition, the company's net profit margin of 24.8% compares favorably with the average for the biotechnology industry.
The stock price is not only higher than it was a year ago, but it also outperformed the
over the same period of time. Strong earnings growth appears to have been key to this growth, although other factors clearly played a role as well. Although even the best stocks can fall in an overall down market, we feel that this stock still has good upside potential under any other market conditions. Although no company is perfect, we do not currently see any significant weaknesses that are likely to detract from Cubist's generally positive outlook.
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 EPS 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 $3.7 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 54.7%, 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.
is an international higher education company that operates DeVry University, Ross University, Chamberlin College of Nursing and Becker Professional Review. The company has been rated a buy since January 2007. DeVry's strengths can be seen in a variety of areas, such as its impressive record of EPS growth, good cash flow from operations, robust revenue growth, and largely solid financial position.
The company reported revenue growth of 21.3% year over year in the first quarter of fiscal 2009. This growth outpaced the industry average of 12.7%, and it also appears to have helped boost EPS, which improved 29.7% when compared to the same quarter last year. Net operating cash flow increased 21% to $96.8 million in the first quarter. DeVry has a very low debt-to-equity ratio of 0.2, which implies that the company has been very successful at managing its debt levels. During September 2008, DeVry completed the acquisition of U.S. Education, the parent company of Apollo College and Western Career College, which operates 17 campus locations in the western U.S.
Management stated that DeVry's strong first quarter results were driven by a strategic plan to increase enrollment through improved marketing and recruiting. The acquisition of U.S. Education also helps this strategic plan by allowing DeVry to further diversify its educational offerings. The company is confident that it should be able to continue maximizing shareholder value and achieving long-term growth goals despite a tough economy due to its diversified portfolio. It is important to remember that a quick ratio of 0.7 indicates a potential problem in covering short-term cash needs. In addition, the company shows low profit margins. All the same, we feel that the strengths detailed above are enough to outweigh any potential weaknesses at this time.
, 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 Oct. 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 with 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 $4.5 million in the second quarter of fiscal 2007 to $5.8 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 5.5, 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.
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 over year. 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 cents 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.
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.