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, large-cap 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
, which makes complex metal components and products for the aerospace and industrial gas turbine industries. It has been rated buy since June 2005. The company has recently made acquisitions expanding its casting, forging and fastener product offerings, and these should fuel revenue growth.
Precision's net income has also been increasing as a result of margin expansion and higher income from continued operations (which were partially offset by higher interest expense and taxes). Because Precision depends on the aerospace industry for its top-line growth, any slowdown in that industry could lead to reduced demand for its products. Other possible concerns include fluctuations in the prices of basic materials and any unseen difficulty in integrating recent acquisitions.
mines, smelts and refines copper in southern Peru. It has earned a buy rating since July 2005. The company has benefited from higher metal prices, which have translated into strong revenue and net income increases. Net income growth was further driven by expanded operating margins, lower net interest expenses and a decline in the effective tax rate. The positive trend in net income has contributed exceptional return on equity. Southern Copper also has a strong project pipeline, with plans to increase copper output by 100,000 tons by 2009.
, which makes navigation, communications and information devices based on GPS technology, has been rated a buy since July 2005. The company has shown outstanding revenue growth, notable return on equity, a two-year pattern of steady increases in EPS and is carrying no debt. These strengths outweigh the fact that the company is trading at a premium valuation based on TheStreet.com Ratings' review of its current price compared to factors such as earnings and book value.
Rated a buy since May 2005,
designs, manufactures, distributes and repairs diesel and natural gas engines and electric power generation systems. The company shows steady revenue growth and positive EPS growth. It is aggressively pursuing a cost optimization strategy by adopting six sigma, global sourcing and technical productivity initiatives. It also plans to enter the light-duty diesel market in both the U.S. and Canada.
Cummins distributed a 2-for-1 stock split on March 8. Because Cummins operates in various competitive markets, the buy rating depends on the economic conditions of the automotive, construction and general industrial sectors. Growth prospects would likewise be dimmed by any decline in margins or return on equity.
owns one of the largest rail networks in the U.S. It has been rated a buy since July 2005. The company's net income fell 16.9% in the second quarter of 2007 over the year-earlier period, and EPS declined 14.5% over the same period. Its revenue increased by 4.5% for the quarter compared to last year, and it repurchased common stock worth $548 million as part of its $3 billion share repurchase plan. CSX also announced a 25% increase in the company's quarterly dividend. The company's strengths outweigh its subpar net income growth.