Today we start with Precision Castparts ( PCP), a manufacturer of complex metal components and products for the aerospace and industrial gas turbine industries. It has been rated a buy since March 2005. The company has completed recent acquisitions to expand its casting, forging and fastener products offerings, fueling revenue growth. Precision also shows strong cash flow that has enabled it to repay debt while maintaining its dividend payout. Since Precision is dependent on the aerospace industry for its top-line growth, a slowdown there could lead to reduced demand for its products. Any fluctuations in the prices of basic materials or any unseen difficulty integrating recent acquisitions could also be concerns.
Russian dairy products and beverages manufacturer Wimm Bill Dann ( WBD) has earned a buy rating since December 2005. The company has recently completed strategic acquisitions of several companies with strong brand portfolios and leading market positions in their respective regions. It has also shown impressive revenue growth, net income increases and an attractive return on equity. The buy rating is not without risk. Prices for Wimm Bill Dann's major inputs -- such as raw milk, juice concentrate, sugar and packaging materials -- are facing major inflation. Should the trend continue, the company's future profits might be hurt.
Volvo ( VOLV), which sold its car business to Ford in 1999 but still makes trucks, buses, construction equipment and aircraft engine parts, has been rated a buy since March 2005. The company has shown stellar revenue growth, solid stock price performance, outstanding EPS growth and compelling growth in net income. These strengths outweigh the company's low profit margins.
Albemarle ( ALB) develops, manufactures and markets specialty chemicals around the world. The company has been rated a buy since March 2005, and its strengths include notable return on equity, impressive increases in net income and a compelling record of EPS growth. These positives outweigh the company's low profit margins. Albemarle's stock has shown a dramatic appreciation, making it relatively expensive compared with its industry peers. Nevertheless, its other strengths justify the higher price levels.
Cummins ( CMI), rated a buy since March 2005, designs, manufactures, distributes and repairs diesel and natural gas engines and electric power generation systems. The company shows steady revenue growth and a low debt-to-equity ratio. It also recently announced plans to enter the light-duty diesel market in the U.S. and China, and launched a joint venture to make engines with Beijing-based Beiqi Foton Motor Company. Because Cummins operates in various competitive geographical markets, the buy rating depends on the economic conditions of the automotive, construction and general industrial sectors. Growth prospects would likewise be dimmed by any decline in margins or return on equity.
Oil and gas transportation company Oneok Partners ( OKS) has maintained a buy rating since June 2006. The company has recently acquired valuable natural gas and processing assets that reduce its dependence on regulated fee-based transportation revenue. Oneok shows impressive revenue growth and superior return-on-equity that is significantly higher than that of the industry average. It also has enjoyed impressive net income growth. Risks to the buy rating include an unexpected rise in interest rates, which could drag down profits because the company has taken on more debt to fund its aggressive expansion strategy. Oneok is also vulnerable to the risk of a compressed gathering and processing margin, which is related to volatile natural gas prices.
AllianceBernstein Holding ( AB), provides diversified investment management to a broad range of clients, and has been rated a buy since March 2005. The company shows a number of positive financial measures, including a striking record of EPS growth, robust revenue growth, and a very high gross profit margin. These impressive financial strengths, and the fact that the company shows no significant weaknesses, justify the relatively high price of the stock.
Boutique jewelry and watchmaker Movado ( MOV) has been ticking along with a buy rating since March 2005. The company should continue to outperform the majority of stocks rated by TheStreet.com, even though the price already has been running above the S&P 500. Movado has a wide range of positives, including a commendable debt-to-equity ratio and revenue growth that has more than doubled the industry average. The company also shows attractive valuation levels and displays no major weaknesses to threaten the buy rating in the foreseeable future.
Garmin ( GRMN), which makes navigation, communications and information devices based on GPS technology, has been rated a buy since March 2005. The company has shown stellar revenue growth, notable return on equity, a two-year pattern of steady EPS growth, and is carrying no debt. Though no company is perfect, we do not currently see any weaknesses that are likely to detract from the generally rosy outlook.
Rated a buy since March 2005, BG Group ( BRG) produces, transmits and supplies natural gas to more than 20 countries worldwide. The company has completed several key acquisitions and agreements recently as it continues to focus on capacity expansion. With crude oil prices well above historical averages, exploration and production companies are increasing their efforts, and the tight supply-demand situation is likely to keep oil at high price levels. This would be a boon for BG. But BG is not without risk. Having made significant investments in oil and gas exploration at a time when oil prices were at record levels, any significant downturn could hurt the company's future profitability.