Top 5 Mid-Cap Stocks
Each business day, 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 is based on data from the close of the previous trading session. Today we focus on mid-caps. These are stocks of companies that have market capitalizations of between $500 million and $10 billion that 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.
Greif ( GEF) manufactures and distributes industrial packaging products through three segments: industrial packaging and services; paper, packaging and services; and timber. It has been rated a buy since December 2005. The company maintains a largely solid financial position with reasonable debt levels, robust revenue and EPS growth, and a solid stock price performance. These strengths outweigh the company's low profit margins.
Fiscal-year fourth-quarter revenue climbed 19.9% over a year ago, outpacing the industry average of 14.3%. EPS increased 30.3% over the same period, to $1.16 per share in the fourth quarter compared with 89 cents a share in the same period last year. Greif has demonstrated a pattern of positive EPS growth over the past two years, and this trend is expected to continue. In addition, its debt-to-equity ratio of 0.68 is less than that of the industry average, implying that there has been relatively successful management of debt levels. Circor International ( CIR) engages in the design, manufacture and distribution of valves and fluid control products. It has been rated a buy since September 2005. The company's third-quarter income increased 42% to $10.4 million, or 62 cents a share, continuing a pattern of EPS growth. This is expected to continue. Excluding items, the company earned 59 cents a share for the quarter. Revenue increased 9% to $164 million, outpacing the industry average of 5.1%. Machinery industry faces some challenges, including the recent surge in commodity costs, which has lowered margins on many goods. These factors have driven the company's stock to a level that is somewhat expensive compared with the rest of its industry. Harris ( HRS) is a communications and information technology company serving government and commercial markets worldwide. It has been rated a buy since November 2005. The company's revenue increased by 30% in the first quarter of its fiscal year 2008 compared with the same period last year, while earnings increased 21.7% over the same time frame. Harris has demonstrated a pattern of positive EPS growth over the past two years, a trend that TheStreet.com Ratings believe is likely to continue. It also shows solid stock price performance, reasonable valuation levels and good cash flow from operations. These strengths outweigh the company's low profit margins.
AptarGroup ( ATR) manufactures and sells dispensing systems to the personal care, cosmetic, pharmaceutical and food/beverage markets worldwide. It has been rated a buy since October 2005. Third-quarter revenue increased 19.9% over a year ago to $485.7 million, powered by strong sales, favorable exchange-rate movements and acquisitions. These factors, along with lower net interest expense and lower tax rates, boosted net income by 39.5% to $39.48 million for the quarter. AptarGroup also implemented a share buyback program authorizing the repurchase of about $19.70 million worth of stock during the fourth quarter. In addition to noting its financial performance, TheStreet.com Ratings is encouraged by the company's solid fourth-quarter earnings outlook, its initiatives to increase shareholder returns and its strong balance sheet. The buy rating is not without risk. AptarGroup operates in highly competitive markets, especially in regards to price. This, together with increasing raw material costs over the past few years, could impact the company's operating results. FMC ( FMC), a chemical company, has been rated a buy since December 2005. The company has a largely solid financial position with reasonable debt levels, a solid stock price performance, good cash flow from operations, and EPS and revenue growth. These strengths outweigh the fact that its return on equity has been somewhat disappointing. Third-quarter earnings grew to 48 cents a share, up from 44 cents a share a year ago. Revenue increased nearly 10% over the same period. Investors have apparently begun to recognize FMC's positive factors, as the company's shares are up 43.38% in the 12 months prior to Dec. 14. The stock's sharp rise has already helped drive it to a level that is relatively expensive compared with the rest of its industry, but TheStreet.com Ratings feels that other strengths FMC displays justify these higher price levels.