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.
Deere & Co.
has been rated a buy since June 2005. It recently completed the acquisition of Lesco, a leading supplier of lawn care, landscape, golf course and pest-control products; the deal doubled the number of wholesale distributor locations for its landscaping equipment.
Deere is well-positioned to benefit from the surge in corn production -- driven by increased demand for ethanol -- which could compel farmers to buy more equipment. Risks include any adverse weather conditions, which could hurt farmers' production and income and leave them with less money to spend on new equipment. In addition, Congress will begin negotiating a new farm bill this year, which could reduce farm subsidies and likewise leave farmers with less money to invest in capital. The current housing construction slump could put pressure on the company's construction and forestry businesses.
L-3 Communications Holdings
, a military-equipment company, has been rated a buy since July 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.
PC maker and information technology provider
has been rated a buy since July 2005. The company saw revenue rise in all of its divisions -- technology solutions, personal systems, imaging and printing, and financial services -- during the second quarter of 2007, compared with the same period last year. It has worked to improve its competitive position by diversifying its operation, lowering the cost structure with a restructuring program, and deploying capital to key business segments.
Still, competition and exposure to emerging markets is forcing the company to lower its prices to defend its market share. As a result, Hewlett-Packard's margins may contract going forward.
engages in the exploration, refining and transportation of crude oil and petroleum products worldwide and has been rated a buy since July 2005. The company saw a year-on-year income drop in its exploration and production segment as well as in its international segment in the second quarter, but its refining, marketing and transportation income increased by 35.9% over the same period.
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 increase of 8 cents per share -- or 20% -- in the quarterly dividend to 24 cents a share, and it 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, and 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
, 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.