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 Dec. 5, 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.
Chicago Bridge & Iron
, an engineering and construction company, has been rated buy since August 2006. The company's strengths can be seen in several areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures, solid stock price performance, impressive record of EPS growth and compelling increase in net income. These strengths are expected to outweigh the company's weak operating cash flow.
Third-quarter net income increased 81.1% over a year ago to $58.74 million, or 61 cents a share, while revenue climbed 36% to $1.17 billion. The company has demonstrated a pattern of EPS growth over the past two years. We believe that this trend should continue. These strengths outweigh the company's weak operating cash flow.
, which supplies aerospace and defense security products, has been rated a buy since November 2005. Third-quarter earnings grew 25.9%, driven by commercial aircraft equipment sales. Net income increased to $126.80 million, or 99 cents a share, for the quarter. (Excluding items, earnings for the quarter were $1.10 a share, which beat the consensus estimate of 91 cents a share.)
Third-quarter revenue rose 14.8% to $1.40 billion compared with the same period last year, and the company's overall operating margin rose to 17.23% from 14.47% in a year earlier. During the quarter, Goodrich declared a dividend of 20 cents a share. Goodrich agreed to sell its Aviation Technical Services business to Macquarie Bank for about $90 million.
Any decline in government spending and the weakened condition of the airline industry are some of the downside risks.
Telecom services provider
has been rated a buy since November 2005. Its revenue increased 13.6% in the third quarter compared with the same period last year, supported by strong sales across its business segments. Net income grew by 23.4% over the same time frame, driven by margin expansion, lower interest expense and lower taxes.
Atlantic Tele-Network operates in small, underserved markets, including Bermuda, Guyana and rural areas in the U.S. These markets provide ample growth opportunities and typically offer less competition. Strong cash generation capability combined with low financial leverage provides the company with the financial flexibility to fund business acquisitions and network expansion to drive future growth.
The principal risks to the buy rating include any termination of the company's exclusive right to provide wireline local and long-distance telephone services in Guyana, as well as adverse developments in regulatory and economic conditions. In addition, while there are long-term strategic benefits, Atlantic Tele-Network's recent decision to sell 59 cell sites and purchase and lease spectrum could hurt revenue growth over the near term.
, 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. Third-quarter net income increased 46.7% from the same period a year ago to $39.34 million, or 40 cents a share. Revenue climbed 12% to $175 million in the same time frame.
is a communications and IT company serving government and commercial markets worldwide. It has been rated a buy since November 2005. The company's revenue increased by 30% in the first quarter of its fiscal 2008 compared with the same period last year, while earnings increased 21.7% over the same time frame. Harris has demonstrated a pattern of positive EPS growth over the past two years, a trend that TheStreet.com Ratings believe is likely to continue. It also shows solid stock price performance, reasonable valuation levels and good cash flow from operations.
These strengths outweigh the company's low profit margins.