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
L-3 Communications Holdings ( LLL), a military-equipment company, has been rated a buy since October 2005. Third-quarter net income rose 21% over a year ago. Revenue increased by 11.1% during the same period, outpacing the industry average of 8.5%. L-3's earnings per share grew by 19.1% and the company's stable EPS growth over the past year indicates that it has sound management over its earnings and share float. Its net operating cash flow rose 24.41% to $324.10 million during the third quarter compared with the same period last year. TheStreet.com Ratings anticipates that these figures will experience more growth in the coming year. The company's stock price rose by 36.16% in the 12 months prior to Nov. 1, and it should continue to move higher.
Johnson Controls ( JCI), which makes building heating and cooling systems, has been rated a buy since August 2005, based on its impressive growth in revenue and net income. The company recently reported that its fiscal fourth-quarter income from continuing operations increased to $469 million, or 78 cents a share. Fourth-quarter revenue increased by 10.6% compared with the same period last year, driven by strong growth in the building efficiency and power solutions segments. Building efficiency rose by 15.4% to $3.61 billion in the quarter, mainly due to strong commercial building markets globally and higher demand for its products to improve energy efficiency and lower operating costs in nonresidential buildings. For 2007, net income increased 21.8% to $1.25 billion, or $2.09 a share. Revenue rose 7.4% to $34.62 billion for the year. Johnson Controls' performance largely depends on its ability to drive higher sales from its building efficiency and automotive experience segments. A sluggish housing sector and rising fuel prices hurting the automobile industry might restrict revenue growth in both segments.
Parker-Hannifin ( PH), which makes motion and control technologies and systems, has been rated a buy since October 2006. Its fiscal first-quarter net income increased 9% from a year ago to $229.60 million, bolstered by strong sales growth in its industrial international and aerospace segments. Its revenue increased by 9.2% over the same timeframe, driven by a mix of organic growth, strategic acquisitions and positive foreign currency exchange rates.
Hewlett-Packard ( HPQ), a technology products and services company, has been rated a buy since September 2005 based on growing revenue, strong cash flow and expanding margins. Third-quarter earnings climbed 29% from a year ago to $1.78 billion, or 66 cents a share. Revenue increased 16% to $25.38 billion. The gain in sales volume was partially offset by a reduction in average selling price, particularly in emerging markets. Ongoing restructuring programs increased operating margins by 140 basis points. The company has made significant progress in improving its competitive position by diversifying its operations, lowering the cost structure and deploying capital in key business segments. Stiff competition and exposure to emerging markets is forcing the company to lower its prices in order to defend its market share. As a result, Hewlett-Packard's margins could deteriorate in the future.
Rated a buy since September 2005, Telmex-Telefonos de Mexico ( TFONY) provides fixed-line telephony services in Mexico, the U.S. and numerous countries in Latin America. It has been rated a buy since November 2005 and maintains a largely solid financial position with expanding profit margins, revenue growth and a pattern of EPS growth over the past two years that is likely to continue.