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, large-cap stocks are in the spotlight. These are stocks of companies that have market capitalizations of over $10 billion and rank near the top of all stocks rated by our proprietary quantitative model, which looks at more than 60 factors. In addition, 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. Top Five Large-Cap Stocks |
Emerson Electric Co. ( EMR), a diversified technology company, has been rated a buy since December 2005. Fourth-quarter revenue increased 11% to $6.13 billion, driven by double-digit sales growth from three of its five segments. Net income increased 18% to $623 million, or 78 cents a share, in the fourth quarter, driven by strong sales performance and a continued focus on cost reduction, which supported the margin. Higher net income boosted the return on equity and assets, with ROI expanding 172 basis points to 24.35% and return on assets improving to 10.85% from 9.88%. On the downside, Emerson Electric operates in a highly competitive environment and that could affect prices or customer demand for its products. Any slowdown in the U.S. economy could pose a threat to the company's performance. In addition, the company is highly leveraged. Air Products and Chemicals ( APD), a chemical and gas producer, has been rated a buy since December 2005 on the basis of its strong revenue growth, expanding margins and increased net income, coupled with a notable return on equity. Higher pricing and volumes across various business segments have supported the revenue growth. Fiscal-year fourth-quarter profit increased 128% over a year ago, led by higher net sales, to $292.80 million, or $1.31 a share. Sales climbed by 10.3% to $2.60 billion, due to higher pricing and volumes in the merchant gases segment and higher volumes in its tonnage gases and electronics and performance materials segment. Air Products and Chemicals faces risk from high competition from several large, global competitors. Furthermore, unfavorable effects of currency fluctuations may adversely affect the top line of the company. Our quantitative rating is based on a variety of historical fundamental and pricing data and represents our opinion of a stock's risk-adjusted performance relative to other stocks. However, the rating does not incorporate all of the factors that can alter a stock's performance. For example, it doesn't always factor in recent corporate or industry events that could affect the stock price, nor does it include recent technology developments and competitive dynamics that may affect the company. For those reasons, we believe that a rating alone cannot tell the whole story and that it should be part of an investor's overall research.