Each weekday, 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 -- and publishes these lists in the Ratings section of our Web site.
This list, updated daily, is based on data from the close of the previous trading session. Today, all-around-value stocks are in the spotlight. These are stocks of companies that meet a number of criteria, including annual revenue of more than $500 million, lower-than-average valuations such as a price-to-sales ratio of less than 2, and leverage that is less than 49% of total capital.
In addition, they must 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.
First up is financial services firm
, which has been rated a buy since March 2006. The rating is based on favorable industry trends due to positive trends in the employment market coupled with improving corporate confidence, as well as recent acquisition and joint ventures. The company has seen income growth from continuing operation, and a $3 billion stock repurchase plan is scheduled for fiscal-year 2007, which could boost EPS, return on equity and the share price.
The main risks could arise from any sharp fluctuation in equity markets, decline in investment spreads, negative competitive events on premium rates, any adverse regulatory developments and unexpected catastrophic events.
Insurance and financial services company
has merited a buy rating since March 2005. With a strong market position and favorable industry trends, the company is positioned for continued strong financial performance.
MetLife has bolstered its market position in the core insurance and annuity business with its acquisition of Travelers Insurance Company and the completion of a distribution agreement with
in 2005, giving it one of the broadest distribution networks in the sector. Ongoing consolidation within the industry will lead to sustained growth. Risks include changes in interest rates, equity prices and any slowdown of the economy.
As with other insurance and financial services companies, risks include any sharp fluctuation in equity markets, decline in investment spreads, negative competitive effects on premium rates, adverse regulatory developments and any unexpected catastrophic event.
has been rated a buy since March 2005. Revenues for HPQ continue to rise, reaching $25.5 billion in the second quarter of fiscal 2007, led by higher sales of personal computers and servers. Other positives include expanding margins from restructuring initiatives, share buybacks and dividend payouts.
The biggest risk to the buy rating is the intensely competitive nature of the computer and printer markets. In the future, Hewlett-Packard might have to lower prices in order to maintain market share.
is involved in every aspect of crude oil and natural gas, from exploration to distribution. It has earned a buy rating since May 2005. The company has shown steady top-line growth and increased revenue, primarily due to increased production volumes. Revenue growth was also driven by a combination of higher average crude oil selling price and production, as well as higher gas sales volume.
Hess made significant investments in oil and gas exploration in the recent past, at a time when oil prices were close to record levels. Any unexpected sharp downturn in oil and gas prices may hurt earnings. Exploration disruptions could also harm results.
Steel manufacturer and retailer
has been rated a buy since April 2005. The company has shown strong financial performance driven by higher volume resulting from improved steel prices and higher steel shipments.
Nucor has shown exceptional shareholder returns due to improved return on equity, steady EPS growth and the recent acquisition of Harris Steel Group, which enhanced its market presence in reinforced steel bars, wire mesh and heavy industrial steel grating.
The principal risk to the rating is presented by any continued steel imports into the U.S. market, which could result in an inventory glut and hurt prices. Any unexpected increase in steel scrap costs could also hurt Nucor's operating margin.