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, fast-growth stocks are in the spotlight. These are stocks of companies that are projected to increase revenue and profit by at least 12% in the coming year and rank near the top of all stocks rated by our proprietary quantitative model, which looks at more than 60 factors. The stocks must also be followed by at least one financial analyst who posts estimates on the Institutional Brokers' Estimate System. They 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.
Today leads off 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 product offerings, and that should fuel revenue growth. Precision also shows strong cash flow that has enabled it to repay debt while maintaining its dividend payout. Since Precision depends on the aerospace industry for its top-line growth, any slowdown in that industry could lead to reduced demand for its products. Any fluctuations in the prices of basic materials or any unseen difficulty in integrating recent acquisitions could also be of concern.
Rated a buy since July 2005, Franklin Resources ( BEN) offers investment advice and management to open-end investment companies. The company displays robust revenue growth, significantly increased net income and improved return on equity. These strengths outweigh the fact that the company is trading at a premium according to our review of its current price compared with earnings and book value.
Rated a buy since November 2005, Belden CDT ( BDC) makes signal transmission products for data networking, consumer electronics, industrial, security and aerospace applications worldwide. It displays net income growth, a low debt-to-equity ratio, a pattern of EPS growth over the past two years and impressive stock price appreciation. These strengths outweigh the company's low profit margins.
Rated a buy since May 2005, Manitowoc ( MTW) makes cranes, food service equipment and marine products. The company demonstrates notable revenue growth, significant EPS improvement, impressive stock price appreciation and net income growth that has significantly outpaced that of the S&P 500 and its industry. Given the company's other strengths, its weak operating cash flow is not a threat to its buy rating at this time.
Telephone titan AT&T ( T) has been rated a buy since March 2006. The company's strong revenue growth was due to the acquisition of BellSouth and record new subscribers during its first quarter of 2007. Growth in the wireless business helped offset the losses in the traditional wireline segment. Once the BellSouth merger is completed, AT&T expects higher free cash flow and merger synergies. Stiff competition from wireline and cable operators, merger-related challenges and a decline in return on equity could restrict the company's growth prospects.