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Top Five Large-Cap Stocks

Garmin, Freeport-McMoRan lead the way.

Each weekday, 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. In addition, the stocks must be followed by at least one financial analyst who posts estimates on the Institutional Brokers' Estimate System. The stocks 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.

Leading the list today is


(GRMN) - Get Garmin Ltd. (Switzerland) Report

, which makes navigation, communications and information devices based on GPS technology. It has been rated a buy since August 2005. The company has shown outstanding revenue growth, notable return on equity and a two-year pattern of steady increases in EPS, and it is carrying no debt. These strengths outweigh the fact that Garmin is trading at a premium valuation according to Ratings' review of its current price compared with factors such as earnings and book value.

Freeport-McMoRan Copper and Gold

(FCX) - Get Freeport-McMoRan Inc. Report

engages in the exploration, mining and production of copper, gold and silver. It has been rated a buy since July 2005. Despite a correction in copper prices in July, the long-term industry outlook continues to remain strong, supported by the growing industrialization of China and India.

The company's acquisition of Phelps Dodge resulted in a more than threefold year-on-year growth in revenue for the second quarter, to $5.81 billion. Freeport-McMoRan has ongoing significant development activities to expand its copper production, extend mine lives and develop large-scale underground ore bodies.

The stock is not risk-free. Any unexpected slowdown in copper demand could lead to an inventory pile-up and result in lower copper prices. This, when coupled with higher cost of consumables and energy, could further build pressure on Freeport's operating margin and affect its profitability.

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T. Rowe Price

(TROW) - Get T. Rowe Price Group Inc. Report

has been rated a buy since July 2005. Assets under management reached a record $379.80 billion at the end of the second quarter 2007, up from $293.70 billion a year earlier. T. Rowe Price used available cash to repurchase nearly 1.6 million shares during the second quarter, and it had 16.64 million common shares remaining under its current repurchase authorization. It has an attractive record of dividend return, having increased its payout every year since becoming a public company in 1986.

Any unexpected downturn in the securities markets and the economy in general, any deterioration in the relative investment performance of its products or any adverse regulatory developments could pose a risk to the buy rating.

L-3 Communications Holdings

(LLL) - Get JX Luxventure Limited Report

, 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 affected 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.


(CMI) - Get Cummins Inc. Report

, which designs, manufactures, distributes and repairs diesel and natural gas engines and electric power generation systems, has been rated buy since August 2005. The company shows steady revenue and EPS growth. Earnings are expected to continue to grow, driven in part by its emissions solutions and turbocharger businesses.

The stock is not without risk. Cummins' performance depends on the economic conditions of various competitive geographical markets, particularly in the automotive, construction and general industrial sectors. Going forward, a decline in margins as well as return on equity could restrain the company's growth.