Lance, Pegasystems: Top 5 Mid-Cap Stocks
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BOSTON (
) -- The following mid-cap companies have market values between $500 million and $10 billion and receive "buy" ratings from our proprietary quantitative model, which considers more than 60 factors. They're ordered by their potential to appreciate, starting with the company with the best growth prospects.
Lance
(LNCE)
makes snack foods, including Cape Cod Potato Chips and Archway Cookies.
The numbers
: Second-quarter net income surged 252% to $9.5 million as earnings per share grew 233% to 30 cents, restrained by a higher share count. Revenue grew 11% to $237 million. Its gross margin jumped from 41% to 44% and its operating margin rose from 3% to 7%. A quick ratio of 1.1 indicates adequate liquidity and a debt-to-equity ratio of 0.4 demonstrates restrained leverage.
The stock
: Lance has advanced 12% in 2009, matching the
Dow Jones Industrial Average
, but underperforming the
S&P 500 Index
. The stock trades at a price-to-earnings ratio of 27, a premium to the market, but a discount to packaged food peers. Shares pay a 2.5% dividend yield.
Pegasystems
(PEGA) - Get Report
sells software to automate business processes.
The numbers
: Second-quarter net income surged 294% to $11 million and earnings per share increased 275% to 30 cents. Revenue rose 25% to $64 million. Its gross margin advanced from 59% to 66% and its operating margin grew from 5% to 18%. Pegasystems has outstanding liquidity, evident in its quick ratio of 3.9, and no debt.
The stock
: Pegasystems has rocketed 178% this year, beating major U.S. indices. The stock trades at a price-to-earnings ratio of 52, a premium to the market and application software peers. Shares pay a 0.4% dividend yield.
Monro Muffler Brake
(MNRO) - Get Report
provides undercar repair and tire services.
The numbers
: Fiscal first-quarter profit increased 21% to $9.4 million, or 46 cents a share, as revenue grew 6% to $128 million. Its gross margin rose from 46% to 48% and its operating margin climbed from 12% to 13%. The company has weak liquidity, evident in its quick ratio of 0.1. A debt-to-equity ratio of 0.5 indicates conservative leverage.
The stock
: Monro Muffler Brake is up 22% this year, beating the Dow and S&P 500. The stock trades at a price-to-earnings ratio of 25, a premium to the market and auto retail peers. Shares pay a 0.9% dividend yield.
Rollins
(ROL) - Get Report
provides pest and termite control services.
The numbers
: Second-quarter net income increased 12% to $25 million and earnings per share rose 13% to 26 cents, boosted by a lower share count. Revenue remained steady at $284 million. Its gross margin rose from 49% to 50% and its operating margin climbed from 14% to 15%. Although Rollins has a weak liquidity position, evident in its quick ratio of 0.4, it has a modest debt load, reflected in its debt-to-equity ratio of 0.2.
The stock
: Rollins is up 4% this year, trailing major U.S. indices. The stock trades at a price-to-earnings ratio of 25, a premium to the market and environmental service peers. Shares pay a 1.5% dividend yield.
Check Point Software
(CHKP) - Get Report
develops Internet security services.
The numbers
: Second-quarter net income decreased 5% to $76 million, but earnings per share remained flat at 36 cents. Revenue increased 12% to $224 million. Its gross margin dropped from 94% to 91%, but its operating margin rose from 42% to 43%. The company has an ideal financial position, with $1 billion of cash and no debt.
The stock
: Check Point Software has advanced 46% this year, outpacing major U.S. indices. The stock trades at a price-to-earnings ratio of 18, a discount to the market and systems software peers. The company does not pay dividends.
TSC Ratings was given an award this year for "Best Stock Selection" among independent research providers by BNY ConvergEx Group. A rating can be viewed for any stock through our
. Ratings are derived from a variety of fundamental and pricing figures and represent our opinion of risk-adjusted performance. However, the rating doesn't incorporate all factors that can alter a stock's performance.
-- Reported by Jake Lynch in Boston.
