Each business day, TheStreet.com Ratings TheStreet.com Ratings compiles a list of the top five stocks in 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.
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%. Earnings per share apparently benefitted from this growth, improving 16% when compared with 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.
operates as a real estate investment trust that acquires, develops, owns, and operates self-storage facilities in the U.S. and Europe. We have
since January 2009. The rating is based on such strengths as the company's largely solid financial position, attractive valuation levels, expanding profit margins, good cash flow from operations and relatively strong performance in comparison with the
over the past year.
For the first quarter of fiscal 2009, Public Storage increased its net operating cash flow 12.79% year over year. The company's gross profit margin of 44.3% was strong and has increased significantly from the same quarter last year, while a net profit margin of 50.7% outperformed against the industry average. In addition, the company has a very low debt-to-equity ratio of 0.06, which implies successful debt management.
Public Storage shows sub par growth in net income in the first quarter. Despite this, we feel that the strengths detailed above outweigh any potential weakness at this time.
and its subsidiaries manufacture and market consumer products worldwide. We have rated the company a buy since January 2005 based on the company's good cash flow from operations, notable return on equity, expanding profit margins, and growth in net income and EPS.
For the first quarter of fiscal 2009, Colgate-Palmolive reported a 12.8% year-over-year improvement in EPS. We feel that the company should be able to continue the trend of positive EPS growth shown over the past two years. Net income also increased, rising 8.9% from $466.5 million to $507.9 million. This growth exceeded the average growth for the company's industry. The company's gross profit margin increased from the prior year's quarter and is currently rather high at 59.8%. Net operating cash flow also increased, rising 21.1%. An additional sign of significant strength is the year-over-year increase in return on equity.
Looking ahead to the remainder of fiscal 2009, Colgate-Palmolive expects its strong organic sales growth to continue. We consider the company's debt management to be generally poor, but we feel that the strengths detailed above outweigh this potential weakness.
Enterprise Products Partners
is a midstream energy company that provides services to producers and consumers of natural gas, natural gas liquids (NGLs), crude oil, and petrochemicals in the U.S., Canada and the Gulf of Mexico. We recently
in April 2009 based on several positive investment measures, the strongest of which is the company's expanding profit margins.
Enterprise continues to deal with the effects of Hurricanes Gustav and Ike but posted a record gross operating margin in the first quarter of fiscal 2009 despite the lingering difficulties. At the same time, NGL, crude oil, and petrochemical transportation volumes were a record 2.2 million barrels per day. The company's gross profit margin is rather low, but it has managed to increase from the same period last year. In addition, a net profit margin of 6.6% compares favorably with the industry average.
Management considered Enterprise's first quarter results to be a good start to fiscal 2009. The stock's performance has been lackluster recently, but we feel that its strengths outweigh the potential weakness 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 have
since January 2009 due to the company's impressive growth and strong fundamentals.
For the first quarter of fiscal 2009, the company reported that its revenue increased 7.9% year over year, beating the industry average of 3.1%. This appears to have led to FPL's 45.2% improvement in EPS, which is a continuation of a pattern of positive EPS growth over the past two years. We feel that this trend should continue, and the market expects an improvement from $4.07 to $4.23 this year. Net income also increased in the first quarter, rising 46.2% from $249 million to $364 million. Return on equity improved slightly when compared to the same quarter last year and can therefore be considered a modest strength for FPL Group. Although the company's stock price is down 15.86%, we do not feel that this should necessarily be interpreted as negative. The drop in price reflects, in part, the market's overall decline and is one factor that makes this stock an attractive investment at this time.
Based on its first quarter results, FPL Group raised its guidance for both fiscal 2009 and fiscal 2010. The company projects adjusted earnings for full year 2009 in the range of $4.20 to $4.40 per share and in the range of $4.65 to $5.05 per share for full year 2010. Although most measures we evaluated indicated that the company has had generally poor debt management, 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 a rating alone cannot tell the whole story and should be part of an investor's overall research.
Who's on Stockpickr Answers?
will be on
on June 17 to respond to investing and trading questions posed by members of the Stockpickr community. Not a member?