Each weekday, 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, updated daily, is based on data from the close of the previous trading session. Today, all-around value 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 62 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.
First up is the Rio de Janeiro-based oil company
, which has had a buy rating since May 2005. The company's strengths include notable revenue growth, a steady pattern of EPS growth over the past two years, improved return on equity and impressive increases in net operating cash flow.
Although Petrobras might have a few minor weaknesses, they are unlikely to have a significant impact on results.
Rated a buy since March 2005,
ranks among the world's leading producers of offshore oil and gas. It is also one of the top three integrated aluminum suppliers in the world. The company has shown strong revenue growth and impressive stock price appreciation. Although it has reported somewhat volatile earnings recently, it is poised for EPS growth in the coming year.
These strengths outweigh the company's subpar net income growth.
Marathon Oil Corporation
engages in the exploration, refining and transportation of crude oil and petroleum products worldwide and has been rated a buy since June 2005. The company's aggressive capital investment plans and new discoveries, together with a positive industry environment, should help support its growth going forward.
Prices for oil and gas are currently well above their historical averages, and this should help the company maintain profitable growth. The strong commodity pricing environment could continue in the near future because of a tight supply-and-demand situation. Refining margins are also at a comparatively high level because of limited refining capacity.
Aerospace and defense contractor
has carried a buy rating since April 2005. Northrop has seen revenue and net income increases, and the federal government's fiscal 2008 budget request continues to favor spending on defense and homeland security. The company's growth will also be driven by its acquisition of high-tech defense manufacturer Essex Corp., which was completed on Jan. 26. (There is still $575 million remaining under the share repurchase authorization, which is expected to be completed by the end of fiscal 2008.)
Northrop Grumman's business is highly cyclical and dependent on government spending; reduced lower national security spending could cause a risk to its buy rating.
Rated a buy since June 2005,
is a chemical company with a product range that includes chemicals, plastics, coatings systems, dispersions, agricultural products and fine chemicals, as well as crude oil and natural gas. The company demonstrates robust revenue growth, solid stock price performance and noteworthy EPS growth.
It has announced an aggressive $4 billion share repurchase program covering about 6.3% of total outstanding shares, which is expected to be completed by 2008. This should support BASF's return on equity going forward. The company's diverse portfolio of products has helped it reduce the potential impact of falling oil prices and business cycle construction in industrial chemicals.
Any unexpected slowdown in global economic growth could curtail demand for industrial chemicals; this would directly affect the company's financial prospects. Any significant increase in energy and input prices could strain BASF's margin.