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 we focus on mid-caps.
These are stocks of companies that have market capitalizations of between $500 million and $10 billion that rank near the top of all stocks rated by our proprietary quantitative model, which looks at more than 60 factors.
The stocks must also be followed by at least one financial analyst who posts estimates on the Institutional Brokers' Estimate System. They 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.
is an international higher education company that operates DeVry University, Ross University, Chamberlin College of Nursing and Becker Professional Review. We've rated it a buy since January 2007. DeVry's strengths can be seen in a variety of areas, such as its impressive record of earnings-per-share 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 0.69 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.
offers personnel radiation monitoring to measure the dosages of x-rays, gamma radiation and other penetrating ionizing radiation to which a person has been exposed. We've rated it a buy since November 2001. Our rating is supported by the company's revenue growth, largely solid financial position, and increases in net income and EPS.
For the fourth quarter of fiscal 2008, Landauer reported that its revenue rose 5.5% year over year, outpacing the industry average of 2.7% growth. This appears to have trickled down to the company's bottom line, as Landauer's EPS improved 18% when compared with the same quarter a year ago. Net income also increased for the fourth quarter, rising 18.9% from $4.6 million to $5.48 million. Landauer has no debt to speak of, and a quick ratio of 1.7 should allow the company to cover its short-term liquidity needs. Additionally, a slight improvement in return on equity can be viewed as a modest strength for the company.
Management announced that it was pleased with its results for fiscal 2008, which resulted from the successful execution of Landauer's strategic plan and the cash flow generation capabilities of its financial model. The company is confident about its future growth opportunities. Although the stock is currently trading at a premium based on factors like book value and earnings, we feel that its strengths justify the higher price at this time.
California Water Service Group
is a holding company that provides water utility and other related services in California, Washington, New Mexico and Hawaii through its subsidiaries. We upgraded it to a buy in August 2008. Our rating is based on a number of company strengths, including its revenue and net income growth, impressive record of EPS growth, expanding profit margins, and good cash flow from operations.
For the third quarter of fiscal 2008, the company's revenue rose 15.7% year over year. Revenue growth appears to have helped boost EPS, which improved over the past year from 67 cents to $1.06. Net income also increased when compared to the same quarter a year ago, climbing 60.6% from $13.8 million to $22.2 million. We consider the company's gross profit margin of 37.6% to be strong. It has increased from the same quarter of fiscal 2007. In addition, the net profit margin of 16.8% is above that of the industry average. Furthermore, net operating cash flow has increased significantly, rising 86.6% to $48.3 million.
Looking forward, California Water Service Group expects to be able to pursue water efficiency programs in order to benefit ratepayers and reduce overall water demand. Although the company may harbor some minor weaknesses, we fell they are unlikely to have a significant impact on results.
Gentiva Health Services
and its subsidiaries provide home health and related services throughout the U.S. Our buy rating has not changed since November 2005. This rating is supported by the company's revenue growth, largely solid financial position, and expanding profit margins. Other strengths include a notable return on equity and good cash flow from operations.
For the third quarter of fiscal 2008, the company reported that its revenues rose 12.4% year over year. This growth appears to have helped boost EPS, which rose from 28 cents a year ago to $4.07 in the most recent quarter. Gentiva's return on equity improved greatly, rising from 9.5% to 31.1%. The company also has a gross profit margin of 45.1%, which we consider to be strong. In addition, the company's low debt-to-equity ratio of 0.5 implies that it has successfully managed debt levels, while a quick ratio of 1.6 indicates that Gentiva is able to cover its short-term liquidity needs.
Looking ahead, Gentiva adjusted its revenue outlook and raised its earnings outlook for full year fiscal 2008 based on the performance to date of its Home Health segment. The company now expects net revenues ranging between $1.28 billion to $1.30 billion, and anticipates diluted earnings per share to be between $1.47 and $1.51, up from the $1.36 to $1.43 range previously provided. Although no company is perfect, we do not currently see any significant weaknesses which are likely to detract from Gentiva's generally positive outlook.
New Jersey Resources
is an energy services holding company that provides retail and wholesale energy services to customers in New Jersey, other states from the Gulf Coast to New England, and Canada. Our rating has been in place since September 2002. This rating is supported by the company's healthy revenue growth, solid stock price performance, compelling net income growth, and impressive record of EPS growth.
For the fourth quarter of fiscal 2008, the company reported revenue growth of 40.1% year over year, which outpaced the industry average of 22.6%. Revenue growth appears to have helped boost EPS, which rose significantly from a loss of 91 cents per share in the fourth quarter of fiscal 2007 to a profit of $1.86 in the most recent quarter. Net income surged 305.1% when compared to the same quarter a year ago. In addition, the company announced that its Board of Directors recently approved a 10.7% dividend increase, bringing the quarterly dividend rate to 31 cents per share. The company has paid quarterly dividends continuously since it began in 1952.
Looking ahead to fiscal 2009, New Jersey Resources forecasts net financial earnings in the range of $2.30 to $2.40 per basic share. Approximately 30% to 40% of those earnings are expected to come from the company's wholesale energy services subsidiary, NJR Energy Services. The company shows low profit margins, but we feel that its strengths outweigh any potential weakness at this time. Strong earnings growth has helped the stock price rise over the past year, and the stock should see more upside potential unless a broad bear market prevails.
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 a rating alone cannot tell the whole story and should be part of an investor's overall research.