Top Five Fast-Growth Stocks -- April 7

Bucyrus, Partner Communications, CVS Caremark, FTI Consulting and MEMC Electronic Materials are all on top.
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Updated from 6:59 a.m. EDT

Each business day, 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 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.

Fast-Growth Stocks that Could Double

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Bucyrus

(BUCY)

designs, manufactures and markets equipment for use in surface mining. Products include draglines, electric mining shovels and rotary blasthole drills. The company also provides the aftermarket replacement parts and service for these machines.

Over the life of a machine, customer purchases of aftermarket parts and services generally exceed the original purchase price of the machine. Bucyrus has a network of 26 sales and service offices located in all countries with major surface mining operations, as well as manufacturing facilities in Wisconsin.

Bucyrus has been rated a buy since July 2006. Bucyrus reported impressive revenue growth of 167% year over year in the fourth quarter of 2007. Net income also grew, rising to $61.9 million from $17.5 million a year ago. The company also reported significant earnings per share improvement in the most recent quarter. EPS improved to $1.64, up from 56 cents in the fourth quarter of 2006. It appears that the company's revenue growth helped boost EPS, and we feel that the pattern of EPS growth over the past two years should continue.

Powered by its strong earnings growth and other factors, this stock has surged 121% over the past year. We feel that the company's strengths justify its premium valuation. Bear in mind, however, that the Machinery industry as a whole faces challenges from the recent surge in commodity prices.

Partner Communications

(PTNR) - Get Report

operates a mobile telecommunications network based on the Global System for Mobile Communications (GSM) Standard in Israel. The company markets its services by capitalizing on the international Orange brand, which is licensed to the company and has been used successfully in other markets to promote mobile telephone services.

Market surveys show that it has achieved strong brand awareness in Israel. In addition to standard and enhanced GSM services, the company also offers value-added services and products such as roaming, voice mail, voice messaging, color picture messaging, ringtone and game downloads, and information services.

Our buy rating for Partner Communications has not changed since September 2004. Our rating is based on the company's strong revenue and earnings growth, improved gross profit margin and attractive returns. For the fourth quarter of fiscal 2007, revenue grew 31% year over year to $471.7 million, propelled by strong revenue growth from the service and equipment businesses. This revenue growth led to improvements in the company's gross profit margin, which improved 126 basis points to 42.39%.

In addition, net income for the fourth quarter increased significantly to $85.4 million from $40.8 million a year ago. Moreover, the company's return on equity expanded 246 basis points to 56.77% year over year, while return on assets moved up 416 basis points to 18.68%. These positive factors are further strengthened by healthy cash levels. Cash and equivalents more than doubled year over year in the fourth quarter to $38.5 million.

Looking ahead, Partner Communications' network maintenance and expansion costs are expected to decrease because the company agreed during the fourth quarter to replace all third-party vendors with LM Ericsson Israel for its 3G equipment. In addition, Partner Communications received approval for a share buyback plan of up to 600 million new Israeli shekels (NIS).

It is important to remember, however, that the company's performance may suffer from any adverse regulatory actions related to interconnect tariffs, roaming charges and SMS tariffs. Changes to number-portability regulations could also affect the company's results. Finally, the company's declining operating margin and higher leverage level may restrict its future earnings.

CVS Caremark

(CVS) - Get Report

combines one of the nation's leading pharmaceutical services companies with the country's largest pharmacy chain. Filling or managing more than one billion prescriptions per year, the company operates approximately 6,200 retail pharmacy stores across 38 states through its CVS/pharmacy segment. Meanwhile, Caremark Pharmacy Services provides comprehensive prescription benefit management services to more than 2,000 health plans, including corporations, managed care organizations, insurance companies, unions and government entities.

The company believes that the 2007 merger between CVS Corporation and Caremark Rx enables it to deliver substantial benefits to shareholders, customers and employers, offering end-to-end services, from plan design to prescription fulfillment, as well as the opportunity to improve clinical outcomes.

We have rated CVS Caremark a buy since March 2004. The company's strengths can be seen in its robust revenue growth, solid stock price performance, improvement in earnings per share and an increase in net income. For the fourth quarter of 2007, the company reported very impressive revenue growth of 82% year over year. This appears to have trickled down to the company's bottom line, improving earnings per share by 12%.

CVS Caremark has, in fact, demonstrated a pattern of positive EPS growth over the past two years. In addition, net income increased 95% in the fourth quarter. Finally, the stock price has risen over the past year.

Management feels that the completion of the merger between CVS Corporation and Caremark Rx sets the stage for future growth, as it allows the company to create a unique position in the marketplace. The market expects an improvement in full-year EPS this year to $2.48 from $1.90. Additionally, we feel that the company's strengths outweigh its somewhat disappointing return on equity.

FTI Consulting

(FCN) - Get 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 and Melbourne.

FTI Consulting has been rated a buy since May 2004. Our recommendation is based on strong revenue and net-income growth, higher returns and a positive outlook. Fourth-quarter 2007 revenue jumped 29% year over year to $280.5 million, driven by gains from higher demand for its services. Net income was $30.8 million, vs. $17.4 million in the fourth quarter of 2006. Net earnings for the quarter grew 77%, benefitting from strong organic revenue growth.

Looking forward, the company has forecast earnings per share and revenue for fiscal 2008 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 in the wake of former employees joining the competition could negatively affect future results.

MEMC Electronic Materials

(WFR)

is a worldwide producer of silicon wafers for the semiconductor and solar industries. These wafers are the foundation for the construction of semiconductors and solar cells, which are in turn used as building blocks for computers, cell phones and DVD players as well as solar products used in solar farms, consumer lighting, etc.

The company operates manufacturing facilities in every major semiconductor manufacturing region in the world, including Europe, Japan, Malaysia, South Korea, Taiwan and the U.S. Customers include nearly all of the major semiconductor device manufacturers in the world, including the major memory, microprocessor and applications-specific integrated circuit manufacturers, as well as the world's largest foundries.

Our buy rating for MEMC has not changed since October 2004. We are encouraged by the company's strong financial performance, superior return on equity and solid balance sheet. MEMC's revenue increased 27% year over year in the fourth quarter of 2007, driven by high sales volume in wafer products. Net income almost tripled to $376.4 million, supported by margin expansion and higher non-operating income. Operating margin expanded 745 basis points to 47.55% due to higher wafer volume, productivity improvements and lower expenses for marketing, administration and research and development as a percentage of sales.

In addition, MEMC's cash flow from operations grew 57%, driven by strong earnings growth and a lower working-capital requirement. The company has generated solid operating cash flow in excess of capital expenditures, which has helped the company accrue a strong cash balance of $1.32 billion.

We expect MEMC to benefit from its fiscal 2007 production capacity expansion and recent contract wins with Conergy and Gintech Energy Corporation. However, any reduction or elimination of subsidies granted by the government could be a major setback for the company. Furthermore, weaker general economic conditions and adverse changes in the pricing environment could negatively affect the company's performance.

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.

Know What You Own

: CVS operates in the drug stores industry, and some of the other stocks in its field include

Walgreen

(WAG)

and

RiteAid

(RAD) - Get Report

. These stocks were recently trading at $38.43, +1.40% and $2.92, -2.34% respectively. For more on the value of knowing what you own, visit TheStreet.com's

Investing A-to-Z

section.

This article was written by a staff member of TheStreet.com Ratings.