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) -- These companies have market caps over $10 billion and "buy"-ratings from our proprietary quantitative model, which considers more than 60 factors. The stocks are ordered by their potential to gain.
makes personal and household 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 expanded 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 and a quick ratio of 0.8. A debt-to-equity ratio of 1.5 indicates excessive leverage. Still, the company's focus on consumer staples helps shield it from economic swings, which is evident in its seven-quarter streak of earnings growth.
: Colgate-Palmolive has gained 5% this year, trailing the
Dow Jones Industrial Average
S&P 500 Index
. The stock trades at a price-to-earnings ratio of 18 and offers a 2.4% dividend yield, which is below the S&P 500 average.
sells business software that does everything from manage databases to design Web sites.
: Fiscal fourth-quarter net income fell 7% to $1.9 billion as revenue declined 5% to $6.9 billion. Earnings per share decreased just 3%, helped by a lower share count. Its operating margin expanded to 43% as the net margin dropped to 28%. The company holds $13 billion of cash, resulting in an impressive quick ratio of 1.9. And its debt-to-equity ratio is conservative at 0.4. Oracle will benefit from a rebound in tech spending this year.
: Oracle has increased 24% this year, beating the Dow and S&P 500, but underperforming the
. The stock trades at a price-to-earnings ratio of 20 and doesn't pay dividends consistently.
is a fast-food chain that sells hamburgers, soda and French fries.
: 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 inched down to 19%. Despite weak earnings, the company has a strong balance sheet and stable revenue. We give McDonald's a financial strength score of 8.2 out of 10, which is higher than our "buy"-list average of 7.
: McDonald's is down 11% this year, lagging behind major U.S. indices. But the stock trades at a fair price-to-earnings ratio of 15 and offers a 3.6% dividend yield, which is higher than the average yield of S&P 500 companies.
Medco Health Solutions
is one of the largest pharmacy-benefit managers in the U.S.
: Second-quarter revenue increased 17% to $14.9 billion. Net income rose 19% to $312 million and earnings per share jumped 26% to 64 cents, helped by a lower share count. Its operating margin remained stable at 4% and its net margin hovered above 2%. The company has a less-than-ideal liquidity position, reflected by a quick ratio of 0.9. But the company has almost quadrupled its cash to $2.1 billion since the year-earlier quarter. A debt-to-equity ratio of 0.8 indicates reasonable leverage.
: Medco is up 26% this year, beating the Dow and S&P 500. The stock trades at an expensive price-to-earnings ratio of 22 and doesn't pay dividends.
Enterprise Products Partners
transports and stores natural gas and crude oil in the U.S.
: Second-quarter revenue dropped 45% to $3.5 billion. Net income fell 29% to $187 million and earnings per share declined 38% to 32 cents, hurt by a higher share count. Still, its operating margin increased from 6% to 10% and its net margin inched past 5%. Enterprise relies on debt and has a weak cash balance. Consequently, we give the company a financial strength score of 6.3 out of 10, lower than the average for "buy"-rated companies.
: Enterprise has surged 37% this year, beating major U.S. indices. The stock trades at a fair price-to-earnings ratio of 18 and offers a cash distribution yield of 7.7%. Cash distributions are taxed differently than dividends.
-- Reported by Jake Lynch in Boston