Each week, 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, last updated Nov. 23, is based on data from the close of the previous trading session. Today, mid-cap stocks are in the spotlight. These are stocks of companies that have market capitalizations of between $500 million and $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.
, an education services company, has been rated a buy since January. The company's strengths can be seen in several areas, such as its largely solid financial position with reasonable debt levels by most measures, solid stock price performance and impressive growth in revenue, EPS and net income.
These strengths should outweigh the company's low profit margins. Fiscal-year first-quarter adjusted earnings totaled $29.1 million, or 40 cents a share, up about 28% from a year ago. The company has demonstrated a pattern of positive EPS growth over the past two years and this is expected to continue. Revenue rose 14% to $250.3 million.
The educational services market is characterized by intense competition. Private companies also face tough competition from public institutions, which are backed by government subsidies, grants, tax incentives and other financial resources generally not available to private schools.
, which makes industrial pumps and valves, has been rated a buy since January. The company has experienced good cash flow from operations, expanding profit margins, and impressive growth in EPS, revenue and net income. Although the company may harbor some minor weaknesses, they do not appear likely to have a significant impact on results.
Third-quarter profit more than doubled to $63.1 million, or $1.10 a share. Excluding charges, earnings were $1.24 a share, beating analysts' forecast of 93 cents. Flowserve has demonstrated a pattern of positive EPS growth over the past two years and this is expected to continue. Revenue jumped 19% to $919.3 million.
The challenges the machinery industry faces include the recent surge in commodity costs, which has lowered margins on many goods. This has resulted in higher prices, which customers have generally absorbed as surcharges have helped cover the difference, though there is no guarantee this will continue.
( IDC), a financial research company, has been rated a buy since November 2005. The company operates from a largely solid financial position with reasonable debt levels by most measures, solid stock price performance, compelling growth in net income and revenue and good cash flow from operations.
While the company may harbor some minor weaknesses, they do not appear likely to have a significant impact on results. Net income increased 46.7% from a year ago to $39.34 million. Revenue climbed 12% to $175 million.
Media companies naturally prosper during election years, thanks to substantial increases in advertising revenues. While the forecasts are impressive, several uncertainties remain, including legislation and court rulings on media merger concentrations within geographical regions, splitting up the royalty pie of DVD distribution fees with screenwriters, competing with cheaper cable advertising rates and the rising popularity of "zipping" -- fast-forwarding through commercials by digital-video-recorder owners.
, a maker of aerospace, defense and electronics products, has been rated a buy since November 2005. Third-quarter profit increased 32% to $10.9 million, or 40 cents a share.
The company has demonstrated a pattern of positive EPS growth over the past two years, and its year-on-year revenue growth of 30.3% for the third quarter was well above the industry average of 6.2%. This growth is expected to continue. Its debt-to-equity ratio of 0.12 is below that of the industry average, implying that there has been very successful management of debt levels.
The stock has risen over the last 12 months to a price level that is now somewhat expensive compared to the rest of its industry. The other strengths this company shows, however, justify the higher price levels. Heico's weak operating cash flow is not a threat to the buy rating at this time.
provides industrial services and engineered products to the steel, construction, railway and energy industries. It has been rated a buy since September 2005. The company demonstrates robust revenue growth, good cash flow from operations, net income growth that has outperformed its industry average and a pattern of positive EPS growth over the past two years.
Third-quarter net income totaled $77.3 million, or 91 cents a share, up from $55.8 million, or 66 cents, a year ago. Sales increased 20% to $927 million.
Powered by these strong financial results, Harsco's stock has appreciated during the last year. The growth has put it at a price level that is relatively expensive compared with the rest of its industry, but given Harsco's strengths, the higher price level is justified. Harsco's strengths also outweigh the company's low profit margins.