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.
L-3 Communications Holdings
, a military-equipment company, has been rated a buy since August 2005. It recently reported that its second-quarter earnings nearly tripled over the same period last year. Higher defense spending worldwide, together with the company's recent acquisitions and a healthy backlog order book, encouraged management to raise guidance for fiscal 2007.
L-3 Communications is expected to benefit from increased defense spending, as it is ranked among the top 10 biggest federal contractors. Also, higher security measures adopted by airports throughout the world will create new demand for L-3's baggage-screening systems and surveillance programs. However, the company's revenue could be impacted by the loss of key contracts in any of its business segments. Also, L-3's dependence on government spending and its strategy of growth through acquisitions could negatively affect results.
Rated a buy since June 2005,
is a chemical company with a product range that includes chemicals, plastics, coatings systems, dispersions, agricultural products and fine chemicals, as well as crude oil and natural gas. The company demonstrates robust revenue growth, solid stock price performance and noteworthy growth in earnings per share.
It recently entered into a $1.5 billion research and development deal with Monsanto to develop crops with increased yields under less than ideal conditions, plants that could result in premium prices in the market. It has also recently made R&D expansion deals in areas such as electronic chemicals and organic semiconductors. The company's consistent focus on expansion could help drive future growth.
However, any unexpected slowdown in global economic growth could curtail demand for industrial chemicals; this would directly affect the company's financial prospects. Also, any significant increase in energy and input prices could strain BASF's margins.
engages in the exploration, refining and transportation of crude oil and petroleum products worldwide and has been rated a buy since July 2005. While the company saw income drop in its exploration and production segment, as well as its international segment, refining, marketing and transportation income increased by 35.9% in the second quarter compared to the same period last year. The increase was driven by improvement in the refining and wholesale marketing gross margin.
During the quarter, Marathon repurchased approximately 57 million of its common shares on a split-adjusted basis, at a cost of $2.50 billion. In addition, it declared an 8 cents per share -- or 20% -- increase in the quarterly dividend to 24 cents a share, and completed a 2-for-1 split of its common stock.
operates wireline and domestic wireless communications services. It has been rated a buy since March 2006. Sales increased by 2.6% in the second quarter compared with the same period last year as the company added 1.30 million net wireless customers to its subscriber base, while revenue from the wireless segment grew by 17.1% over the same period. Verizon saw earnings increase to 58 cents per share in the quarter compared with 51 cents per share in the same period a year ago.
Verizon recently agreed to buy
Rural Cellular Corp.
, a provider of cell phone services in 15 states under the Unicel brand, for $757 million. The acquisition will expand its presence and Verizon expects more than $1 billion in synergies from the purchase.
Risks include possible adverse affects on the company's profitability that include tough competition from wireline, wireless and cable operators, merger integration challenges and high capital expenditures.
Brazilian oil company
has had a buy rating since August 2005. The company demonstrates revenue growth that has outpaced the industry average, and its stock price has increased by 27.11% in the 12 months prior to August 2007. Although almost any stock can fall in a broad market decline, Petrobras should continue to move higher even though it has already enjoyed a nice gain in the past year. The company also has a largely solid financial position with reasonable debt levels by most measures.
These strengths outweigh the company's subpar net income growth.