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 we focus on mid-caps. 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.
manufactures and distributes industrial packaging products through three segments: industrial packaging and services, paper packaging and services and timber. It has been rated a buy since December 2005. The company maintains a largely solid financial position with reasonable debt levels, robust revenue and EPS growth and a solid stock price performance. These strengths outweigh the company's low profit margins.
Fiscal-year fourth-quarter revenue climbed 19.9% over a year ago, outpacing the industry average of 14.3%. EPS increased 30.3% over the same period, to $1.16 per share in the fourth quarter compared with 89 cents a share in the same period last year. Greif has demonstrated a pattern of positive EPS growth over the past two years, and this trend is expected to continue. In addition, its debt-to-equity ratio of 0.68 is less than that of the industry average, implying that there has been relatively successful management of debt levels.
( BUCY), which makes excavation equipment, has been rated a buy since July 2006. The company maintains a largely solid financial position with reasonable debt levels by most measures, good cash flow from operations and growth in EPS, revenue and net income. These strengths are expected to outweigh the company's somewhat disappointing return on equity. Third-quarter net earnings totaled $28.6 million, or 77 cents a share, up from $16.7 million, or 53 cents a share a year ago.
Bucyrus has demonstrated a pattern of positive EPS growth over the past two years and this trend is expected to continue. Revenue leaped by 170.4%, out-stripping the industry average of 8%. The machinery industry overall is poised to continue the growth it has exhibited over the past few years, growth that has outpaced that of the overall economy.
The challenges the industry faces include the recent surge in commodity costs, which has lowered margins on many goods.
manufactures and markets cranes and related products, food service equipment and marine products. It has been rated a buy since November 2005. The company's strengths can be seen in multiple areas, such as its robust revenue growth, impressive record of EPS growth, compelling growth in net income, notable return on equity and solid stock price performance. These strengths should outweigh the fact that the company's profit margins are low.
Third-quarter earnings increased 51% over a year ago to $75.9 million, or 59 cents a share, and revenue climbed 29% to $1.01 billion. Manitowoc raised its guidance for full-year 2007 earnings to $2.55 to $2.60 a share, up from an earlier forecast of $2.45 to $2.50 a share. This stock has surged over the past year and while the stock's sharp appreciation over the last year has driven it to a price that is now somewhat expensive compared to the rest of its industry, Manitowoc's other strengths justify the higher price levels.
( GR), which supplies aerospace and defense security products, has been rated a buy since November 2005. Third-quarter revenue rose 14.8% to $1.40 billion over the year-earlier period. Revenue growth was driven by double-digit growth in the actuation and landings systems division as well as the nacelles and interior systems segment.
During the same timeframe, net income rose 25.9% to $126.80 million from $100.70 million, while earnings rose to $1.10 per share from 79 cents a share in the third quarter of last year. Any decline in government spending and the weakened condition of the airline industry are some of the downside risks.
, a chemical company, has been rated a buy since December 2005. The company has a largely solid financial position with reasonable debt levels, a solid stock price performance, good cash flow from operations and EPS and revenue growth. These strengths outweigh the fact that its return on equity has been somewhat disappointing.
Third-quarter earnings grew to 48 cents a share, up from 44 cents a share a year ago. Revenue increased nearly 10% over the same period. Investors have apparently begun to recognize FMC's positive factors, as the company's shares are up 43.38% in the 12 months prior to Dec. 14. The stock's sharp rise has already helped drive it to a level that is relatively expensive compared with the rest of its industry, but TheStreet.com Ratings feels that other strengths FMC displays justify these higher price levels.
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 impact the stock price, nor does it include recent technology developments and competitive dynamics that may affect the company.
For those reasons, we believe a rating alone cannot tell the whole story, and should be part of an investor's overall research.
This article was written by a staff member of TheStreet.com Ratings.