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 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 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.
Today leads off with oil refiner
, which has been rated a buy since May 2005. The company displays impressive net income growth and a healthy return on equity and leverage level. It has a solid outlook and a strategic capacity expansion at its Port Arthur refinery, improving overall throughput capacity by 30,000 barrels a day.
Valero's performance depends on the future movement of crude oil prices and its impact on sour crude oil discounts. Furthermore, an increase in operating cost is a cause of concern.
has chugged along with a buy rating since April 2005. The company has shown a wide range of strengths, including revenue growth, significant EPS improvement and noteworthy net income growth.
Its recent initiatives to improve its rail network and operating efficiencies, together with strong demand for coal shipments from the Powder River Basin in Wyoming, could drive its growth in the near term.
Because Union Pacific's business is cyclical in nature, it is quite sensitive to changes in economic conditions. Severe weather conditions, currency volatility and higher-than-expected fuel prices could have an adverse impact on its performance.
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.
Insurance and financial services company
has merited a buy rating since May 2005. The company's revenue growth has outpaced the industry average, and strong earnings growth has led its stock to outperform the
. Net income growth has exceeded the S&P 500 average and greatly outperformed the insurance industry average.
These strengths outweigh the company's somewhat disappointing return on equity.
Financial services firm
has been rated a buy since March 2006. The rating is based on favorable industry trends due to positive developments in the employment market coupled with improving corporate confidence, as well as recent acquisitions and joint ventures. The company also displays strong top- and bottom-line growth, while a slower rise in total benefit and expenses compared with revenue led to a strong net income increase.
The main risks could arise from any sharp fluctuation in equity markets, a decline in investment spreads, negative competitive evens on premium rates, any adverse regulatory developments and unexpected catastrophic events.