Top Three Stocks to Play It Safe - TheStreet

Top Three Stocks to Play It Safe

Casey's General Stores, J.M. Smucker and AmerisourceBergen offer a margin of safety.
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BOSTON (TheStreet) -- The stock-market rally, which began in March 2009, hit a brick wall last Thursday. Though stocks rebounded Monday, they were little changed yesterday. Investors were reminded that prices, indeed, move in two directions.

Now is a good time to investigate safer stocks. Here are

TheStreet's

top three all-around value stocks.

Casey's General Stores

(CASY) - Get Report

operates convenience stores and gas stations in the Midwest. It has a market value of $1.9 billion. During the past three years, it has increased revenue 3.6% annually, on average, and boosted net income 26% a year.

Quarter

: Fiscal third-quarter profit increased 23% to $17 million, or 34 cents a share, as revenue grew 31%. The operating margin narrowed from 3% to 2.7%. Casey's has $153 million of cash and $182 million of debt, equal to a debt-to-equity ratio of 0.2.

Stock

: Casey's has advanced 50% during the past year, outperforming U.S. indices. It trades at a price-to-projected-earnings ratio of 16, a 13% premium to its peer average. The shares sell for a PEG ratio of 0.5, a 50% bargain relative to projected long-term growth.

Consensus

: Of analysts covering Casey's, two advise purchasing its shares and seven recommend holding them.

RBC

(RY) - Get Report

offers a price target of $40, leaving a potential 7% return.

Bank of America

(BAC) - Get Report

and

BMO

(BMO) - Get Report

are "neutral" on Casey's.

J.M. Smucker

(SJM) - Get Report

sells jam and jelly. It has a market value of $7 billion. During the past three years, revenue has climbed 2% annually, on average, and net income has advanced 46% a year. The shares achieved annualized gains of 0.5% over the same period.

Quarter

: Fiscal third-quarter net income soared 74% to $135 million, or $1.14, as revenue inched up 2%. The operating margin widened from 14% to 19%. Smucker has $125 million of cash and $910 million of debt, equal to a debt-to-equity ratio of 0.2.

Stock

: J.M. Smucker has advanced 47% during the past 12 months, beating major benchmarks. It sells for a price-to-book ratio of 1.3, a 65% discount to the industry average. It's PEG ratio of 0.4 indicates a 60% discount to expected long-term growth.

Consensus

: Of researchers following Smucker, 10, or 71%, rate its stock "buy" and four rate it "hold."

Janney Montgomery Scott

expects the stock to rise 22% to $72.

Jefferies

(JEF) - Get Report

predicts it will hit $69.

Goldman Sachs

(GS) - Get Report

forecasts $67.

AmerisourceBergen

(ABC) - Get Report

provides wholesale drug distribution. It also provides commercialization services to biotech companies. It has increased revenue 5.6% a year since 2007 and expanded earnings per share 18% a year over the same period.

Quarter

: Fiscal second-quarter profit increased 26% to $181 million, or 63 cents, as revenue grew 11% to $19 billion. The net margin remained in shallow positive territory. AmerisourceBergen holds $1.2 billion of cash and $1.4 billion of debt.

Stock

: AmerisourceBergen has appreciated 76% during the past year, more than major U.S. indices. It trades at a price-to-projected-earnings ratio of 13, a slight discount to its peer average. Its PEG ratio of 0.6 reflects a 40% discount relative to growth.

Consensus

: Of firms rating AmerisourceBergen, 13 advocate purchasing its shares and five recommend holding them.

William Baird

offers a price target of $40, implying 27% of upside remains.

Barclays

(BCS) - Get Report

believes the stock will climb to $38.

-- Reported by Jake Lynch in Boston.

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