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, large-cap stocks are in the spotlight.
These are stocks of companies with market capitalizations of over $10 billion that rank near the top of all stocks rated by our proprietary quantitative model, which looks at more than 62 factors. In addition, the stocks must be followed by at least one financial analyst who posts estimates on the Institutional Brokers' Estimate System. The stocks 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.
primarily operates and franchises McDonald's restaurants. In total, the corporation has more than 30,000 restaurants in more than 100 countries. We have
since March 2004, based on strengths such as its expanding profit margins and solid stock performance.
On Jan. 26, the company reported that its fourth quarter global comparable sales rose 7.2%. Despite this, the company's revenues dropped slightly by 3.3% year over year. Earnings per share also declined 17.9% when compared to the same quarter a year ago. However, we are encouraged by the company's strong gross profit margin of 37.3%. McDonald's net profit margin of 17.7% is also considered a strength for the company, as it compares favorably to the industry average. In addition, McDonald's reported a 16% improvement in full year EPS when compared to fiscal 2007.
Management was pleased with what it considered strong results for fiscal 2008. In particular, the company was content with an increase in customers served per day to 58 million, which it attributed to a strategic focus on menu choice, food quality, and value. In addition, management cited positive results in comparable sales and guest counts across all segments in the fourth quarter of fiscal 2008. Although the company had sub par growth in net income, we believe that its strengths outweigh any current weaknesses and see good upside potential even though the stock has already enjoyed a nice gain in the past year.
, biopharmaceutical company, discovers, develops and commercializes therapeutics to advance the care of patients suffering from life-threatening diseases worldwide. We
in October 2008.
For the third quarter of fiscal 2008, revenue increased 29.5% to $1.4 billion from $1.1 billion a year ago due to higher product sales. Product sales surged 39.1% to $1.3 billion from $961.9 million, driven by strong growth of antiviral product sales (these in turn make up the most significant portion of overall revenue for the company). Royalty revenue plunged 72.4% to $25.2 million from $91 million, hurt by decreased Tamiflu royalties from Roche. Contract and other revenue spiked 29.6% to $7.6 million from $5.9 million a year ago. Margins were squeezed, however, as cost growth outpaced that of revenue. EPS rose from 42 cents in the third quarter of fiscal 2007 to reach 52 cents in the most recent period, an increase of 23.8%.
During the quarter under review, the US Food and Drug Administration granted marketing approval to Viread for the treatment of chronic hepatitis B. The FDA refused to approve the inhaled version of aztreonam lysine and asked the company to conduct another study. Gilead also announced it intends to repurchase $750 million of its shares on an accelerated basis under a $3 billion share repurchase program announced in October 2007. Recently,
(TEVA) applied to the FDA for permission to make a generic version of Gilead's HIV drug, Truvada. Gilead responded with a patent infringement lawsuit that can halt generic entry for a period of up to 30 months. Investors should be aware that this and other patent-related threats can pose a significant operational risk to the company's prospects, and are always situations that require monitoring. Other risks include any other regulatory or legal affairs, as well as any government policies that are considered unfavorable to drug makers.
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
in December 2008, based on such strengths as its growth, efficiency, and solvency.
For the third quarter of fiscal 2008, the company reported revenue growth of 15.0% year over year, boosted in part by record specialty pharmacy revenues of over $2 billion. This growth appears to have helped boost EPS, which improved 48.7% when compared with 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 0.78 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.
Looking ahead, management announced that Medco continues to see strong growth across its businesses. Based on its third quarter results, 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 anticipates 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.
(ABT) is a global, broad-based healthcare company that discovers, develops, manufactures, and sells a diversified line of products that range from nutritional products and laboratory diagnostics to medical devices and pharmaceutical therapies. Key products include pharmaceuticals like Humira and Simcor and nutritional products such as Ensure, Pedialyte, Pediasure, and Similac. We have
since April 2007, based on a variety of strengths that include the company's growth in revenue and net income, impressive record of EPS growth, and expanding profit margins.
For the fourth quarter of fiscal 2008, the company reported revenue growth of 10.1% year over year. Revenue growth appears to have helped boost EPS, which improved 15.6% to 89 cents from 77 cents in the fourth quarter of fiscal 2007. Net income increased 27.7% when compared to the same quarter a year ago. Gross profit margin is rather high at 60.9%, but it has managed to decrease from the same period last year. In addition, a net profit margin of 19.3% compares favorably to the industry average.
Management was pleased with the company's strong results in 2008, including the fact that the company outperformed its growth expectations for the year. In addition, new product launches during 2008 significantly expanded the company's product portfolio. Due to its ongoing business momentum and previously enacted strategic actions, the company believes it is on target for double-digit growth in 2009. Previously issued guidance for fiscal 2009 was confirmed by management, with EPS expected in the range of $3.65 and $3.70. Although the stock itself has shown rather lackluster performance recently, we currently feel that the strengths detailed above are enough to balance any potential weakness. Keep in mind, however, that the Pharmaceuticals industry as a whole is vulnerable to patent expirations and legislative threats to pricing power.
is a global educational services company. The company operates through its subsidiaries: University of Phoenix, Institute for Professional Development, College for Financial Planning, Western International University, Meritus University, Insight Schools and Apollo Global. It also owns Aptimus, a provider of innovative digital media solutions. We
in July 2008 based on some notable strengths, such as its robust revenue growth, solid stock price performance, impressive record of EPS growth, expanding profit margins and good cash flow from operations.
For the first quarter of fiscal 2009, the company reported that its revenue rose by 24.4% year over year, slightly outpacing the industry average of 18.8% growth. This growth appears to have helped boost Apollo's earnings per share, which improved 34.9% in the most recent quarter when compared to the first quarter of fiscal 2008. We feel that the trend of positive EPS growth over the past two years should continue. Net operating cash flow increased by 83.2% in the first quarter, rising to $380.8 million. In addition, net income increased from $139.9 to $180.4 over the past year.
Management stated that Apollo benefitted in the first quarter from investments made over the past several years. The company believes that the current economy is most likely having a positive effect on its business, as evidenced by year-end 2008 momentum carrying into fiscal 2009. With a strong balance sheet and strong operational and academic teams in place, management is optimistic about Apollo's outlook going forward. While we find the company's return on equity somewhat disappointing, we believe 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 a rating alone cannot tell the whole story and should be part of an investor's overall research.