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Top Five Fast-Growth Stocks

Flowserve, Fluor, Exactech, FMC and FTI Consulting are all on top.

Each business day, 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 is based on data from the close of the previous trading session. Today, fast-growth stocks are in the spotlight. These are stocks of companies that are projected to increase revenue and profit by at least 12% in the coming year and rank near the top of all stocks rated by our proprietary quantitative model, which looks at over 60 factors.

In addition, the stocks must be followed by at least one financial analyst who posts estimates on the Institutional Brokers' Estimate System. Please note that definitions of revenue vary by industry, and this screen does not make adjustments for acquisitions, which can materially affect posted results. Likewise, earnings-per-share growth may be affected by accounting charges, share repurchases and other one-time items.

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.


(FLS) - Get Flowserve Corporation Report

engages in the development, manufacture and sale of precision-engineered flow equipments through three divisions: Flowserve Pump, Flow Control and Flow Solutions. The company operates worldwide, with 43% of its revenue coming from North America.

We have rated Flowserve a buy since January 2007. This is based on robust revenue growth, good cash flow from operations and expanding profit margins. Flowserve's revenue rose 19% year over year for the third quarter of 2007. The company also reported earnings per share of $1.10, compared with 49 cents in the third quarter of 2006. Furthermore, net operating cash flow has significantly increased to $106.8 million from the year-ago quarter, and the company has a gross profit margin of 36%, which we consider strong.

The recent surge in commodity costs is a challenge to the machinery industry. This could affect Flowserve's results in the future.


(FLR) - Get Fluor Corporation Report

is a publicly owned engineering, procurement, construction and maintenance services company. With offices in more than 25 countries across six continents, clients come from a wide variety of industries, including chemicals, petrochemicals, government, health care, life sciences and telecommunications. Fluor's world headquarters are located in Texas.

Our buy rating for Fluor has not changed since January 2004. The company's strengths include strong revenue growth, solid stock-price performance and improvement in net income. The company reported record-breaking financial performance across all key metrics in fiscal 2007, according to management. For the fourth quarter of 2007, revenue rose 30% year over year. This growth appears to have helped boost earnings per share, which improved to $2.82 from 90 cents in the fourth quarter of 2006. Net income more than doubled for the fourth quarter to $259.5 million.

Fluor's very low debt-to-equity ratio of 0.14 implies successful management of debt levels. Powered by strong earnings growth and other factors, this stock has surged 56% over the past year.

Management expects Fluor to continue to deliver strong growth in 2008, as global demand for energy, infrastructure and basic materials creates new opportunities. The company continues to win new projects across the various markets that it serves. Management therefore raised its fiscal 2008 EPS guidance to a range of $5.10 to $5.50, from the previous range of $4.90 to $5.30 per share.

We feel that the company's strengths outweigh its relatively low profit margins and should allow the stock to continue to move higher despite its nice gain in the past year. Bear in mind, however, that performance could be affected by the cyclical nature of the markets that Fluor serves, along with any unexpected delays or difficulties in the execution of contracts.

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develops, makes, markets, distributes and sells orthopedic implant devices, related surgical instrumentation and biologic materials to hospitals and physicians in the U.S. and 27 other countries. The company produces knee systems and other joint-replacement products. Revenue is derive primarily from sales of its knee- and hip-replacement systems. However, revenue from the worldwide distribution of biologic materials has increased as a percentage of total revenue.

Exactech has been rated a buy since March 2007, primarily due to the company's strong financial performance, higher guidance and a currently favorable industry trend. For the third quarter of 2007, net sales increased 23% year over year to $30 million, largely due to the success of new products and continued growth from existing products. Exactech performed well in both domestic and international markets on the revenue front; the company reported a 24% increase in revenue from the domestic market and a 21% increase in revenue from international markets. Management raised its fiscal 2007 guidance and now expects revenue between $120.5 million and $122.5 million, with EPS in the range of 78 cents to 79 cents a share.

We expect Exactech to benefit from its continued innovation and expansion. The company remains focused on improving its existing line of business, and it also awaits approval on several new products in both the U.S. and overseas markets. However, the company is highly exposed to foreign exchange risks with its increasing share of global business, and stiff government regulation could negatively impact product approvals and therefore operating results.

FMC Corp.

(FMC) - Get FMC Corporation Report

is a diversified global chemical company operating in three business segments: Agricultural Products, Specialty Chemicals and Industrial Chemicals. The Agricultural Products segment focuses on insecticides and herbicides. The Specialty Chemicals segment's products include food ingredients and pharmaceutical additives. The Industrial Chemicals segment manufactures a wide variety of inorganic materials, including soda ash, hydrogen peroxide, specialty peroxygens and phosphorous chemicals. The company has operations in many areas around the world. North America representing its single largest geographic market.

We have rated FMC a buy since July 2004. Although the company shows low profit margins, its strengths can be seen in multiple areas. Revenue, for example, grew 15% year over year for the fourth quarter of 2007. Additionally, FMC improved earnings per share 42%, and has demonstrated a pattern of positive EPS growth over the past two years. Finally, net income increased substantially to $40.9 million from $12.9 million.

FMC's stock has surged 57% over the past year thanks to its strong earnings growth, and we feel that the stock should continue to move higher. It is important to bear in mind, however, that the financial health of companies in the Chemicals industry depends on the costs of raw materials (especially oil and gas) and the overall strength of the economy. Additionally, almost any stock can fall in a broad market decline.

FTI Consulting

(FCN) - Get FTI Consulting Inc. Report

provides consulting services to organizations confronting legal, financial and reputational issues. The company has capabilities in specialized industries, including telecommunications, health care, pharmaceuticals and utilities. The company has offices in 25 U.S. cities, as well as London, England and Melbourne, Australia.

FTI has been rated a buy since May 2004. Our recommendation is based on the company's strong revenue and income growth, higher returns and positive outlook. For the fourth quarter of 2007, revenue jumped 29% year over year to $280.5 million, driven by gains from higher demands for its services. Net income was $30.8 million, vs. to $17.36 million in the year-ago period. Earnings grew 77%, benefitting from strong organic revenue growth.

Looking forward, the company has forecast earnings per share and revenue for fiscal 2008 to grow in the range of $2.40 to $2.50 and $1.28 billion to $1.32 billion, respectively. However, merger-related challenges, declining margins and the company's failure to retain or hire additional qualified professionals could negatively affect the company's future results.

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 that a rating alone cannot tell the whole story and that it should be part of an investor's overall research.

This article was written by a staff member of Ratings.