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) -- These companies have market caps over $10 billion and "buy" ratings from our quantitative model, which considers more than 60 factors. They're ordered based on their potential to appreciate, starting with the company with the best growth prospects.
sells database and business software.
: Fiscal fourth-quarter net income fell 7% to $1.9 billion as revenue declined 5% to $6.9 billion. Earnings per share decreased 3% to 38 cents because of its lower share count. Its operating and net margins were little changed at 43% and 28%, respectively. The company has $13 billion of cash reserves, contributing to an impressive quick ratio of 1.9. Its debt-to-equity ratio is conservative at 0.4.
: Oracle has increased 26% this year, beating the
Dow Jones Industrial Average
S&P 500 Index
, but underperforming the
. The stock trades at a price-to-earnings ratio of 20. The company doesn't consistently pay dividends.
makes personal products, such as toothpaste and soap.
: Second-quarter revenue declined 6% to $3.7 billion, but net income increased 14% to $561 million, or $1.07 a share. The operating margin increased from 21% to 24% and the net margin jumped from 12% to 15%. Colgate-Palmolive has a less-than-ideal liquidity position, with $928 million of cash, amounting to a quick ratio of 0.8. And a debt-to-equity ratio of 1.5 indicates excessive leverage. But the company's focus on consumer staples affords its business a degree of cyclical resilience, which is evident in its seven-quarter streak of earnings growth.
: Colgate-Palmolive has gained 7% this year, underperforming major U.S. indices. The stock trades at a price-to-earnings ratio of 19 and offers a 2.4% dividend yield, less than the average of S&P 500 companies.
sells hamburgers and French fries through its fast-food stores.
: Second-quarter net income fell 8% to $1.1 billion, or 98 cents, as revenue declined 7% to $5.6 billion. Its operating margin increased from 27% to 29% and its net margin was little changed at 19%. We give McDonald's a financial strength score of 8.5 out of 10, higher than our "buy"-list average of 7.
: McDonald's is down 9% this year, underperforming major U.S. indices. The stock has a fair price-to-earnings ratio of 15 and offers a 3.5% dividend yield.
Medco Health Solutions
is one of the largest pharmacy benefit managers in the U.S.
: Second-quarter net income rose 19% to $312 million and earnings per share jumped 26% to 64 cents, helped by a lower share count. Revenue increased 17% to $14.9 billion. Its operating and net margins remained stable at 4% and 2%, respectively. The company has less-than-ideal liquidity, reflected by a quick ratio of 0.9. But its cash balance has surged 385% to $2.1 billion since the year-earlier quarter. A debt-to-equity ratio of 0.8 indicates reasonable leverage.
: Medco is up 34% this year, beating major U.S. indices. The stock trades at an expensive price-to-earnings ratio of 24. The company doesn't pay dividends.
makes anesthesia, dialysis equipment and other medical products.
: Second-quarter revenue declined 2% to $3.1 billion, but net income rose 8% to $587 million and earnings per share climbed 13% to 96 cents, boosted by a lower share count. The operating margin rose from 22% to 24% and the net margin increased from 17% to 19%. A quick ratio of 1.2 indicates ample liquidity and a debt-to-equity ratio of 0.6 demonstrates conservative leverage.
: Baxter has climbed 8% this year, lagging behind major U.S. indices. The stock trades at a fair price-to-earnings ratio of 17 and offers a lackluster 1.8% dividend yield.
-- Reported by Jake Lynch in Boston
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