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, 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 all stocks rated by our proprietary quantitative model, which looks at over 60 factors. In addition, the stocks must be followed by at least one financial analyst who posts estimates on the Institutional Brokers' Estimate System. Please note that definitions of revenue vary by industry, and this screen does not make adjustments for acquisitions, which can materially affect posted results. Likewise, earnings-per-share growth may be affected by accounting charges, share repurchases and other one-time items. 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. XTO Energy acquires, develops, exploits and explores oil and gas properties. The company also produces, processes, markets and transports oil and natural gas. XTO's proved reserves are located primarily in various regions of Alaska, Arkansas, Colorado, Kansas, New Mexico, Oklahoma, Texas and Wyoming. These fields are generally long-lived, with well-established production histories.
We have rated XTO Energy a buy since November 2001. Its strengths include revenue growth, stock performance and an increase in net income. For the first quarter of fiscal 2008, the company reported that its net income rose 21% to $465 million, while revenue increased 43% year over year. This growth appears to have trickled down to the company's bottom line, as earnings per share improved to 92 cents from 82 cents a year ago. Finally, net operating cash flow increased 12% to $957 million. Management feels that the first-quarter results reflect a strong start to fiscal 2008, which they hope will be another record year. While the stock's sharp appreciation over the last year means it trades at a premium to some of its peers, we feel the price levels are justified by other strengths. Bear in mind, however, that XTO operates in an industry that is highly volatile, and the cyclical nature of oil and gas prices could impact future results. Flowserve ( FLS - Get Report) develops, manufactures and sells precision-engineered flow equipments through 3 divisions: Flowserve Pump, Flow Control, and Flow Solutions. The company operates worldwide in more than 56 countries, with 43% of its revenues coming from North America. We have rated Flowserve a buy since January 2007 based on several positive investment measures, such as increasing revenue and net income. Additionally, the company reported record results in various areas including earnings per share (EPS), sales, and bookings for the first quarter of fiscal 2008. Flowserve's revenues rose 24% year over year in the first quarter, largely due to strong sales in the oil and gas markets. The company also reported that fully diluted earnings per share improved to $1.53 from 59 cents a year ago. Furthermore, net income increased 162% to $88.1 million. Bookings were up 31% for the quarter.
Management raised its fiscal 2008 EPS forecast to a target range of $5.90 to $6.20 from its previous estimate of $5.10 to $5.40. The company is encouraged by its first-quarter results and its continued strength in key markets, and remains confident in its ability to successfully carry out its operational excellence initiatives to increase its performance in the current global environment. Bear in mind, however, that the recent surge in commodity costs is a challenge to the machinery industry as a whole and could therefore affect Flowserve's results in the future. Cummins ( CMI - Get Report) designs, manufactures, distributes and services diesel and natural gas engines, electric power generation systems and engine-related products. These products include filtration emissions solutions, fuel systems, controls and air-handling systems. The company is headquartered in Columbus, Ind., and serves customers in more than 160 countries through a network of 550 company-owned and independent distributor facilities and more than 5,000 dealer locations. Cummins has been rated a buy since March 2004. Despite a somewhat disappointing return on equity of 22% in the most recent quarter, we are impressed by the company's revenue growth, stock-price performance, and improved earnings per share. For the first quarter of fiscal 2008, Cummins' revenues rose 23% year over year. This appears to have helped boost EPS, which improved 37% to 97 cents in the first quarter. Net income rose 33% to $190 million. Cummins also reported strong performances across all business segments, particularly from international markets, which accounted for 57% of the company's first-quarter sales and helped offset rising commodity prices and sluggishness in some U.S. consumer-related markets.
Management feels that Cummins' strong first-quarter results offer proof that the company's diversification and growth strategies are working to help counteract the current economic uncertainty in the United States. Management affirmed previous fiscal 2008 forecasts of at least 12% revenue growth over fiscal 2007. Additionally, the company restated its plans to invest between $550 and $600 million in capital expenditures globally. However, the company's future results could be negatively impacted by rising commodity costs and general economic conditions. BorgWarner ( BWA - Get Report) develops and manufactures highly engineered components and systems for vehicle powertrain applications, including chains, turbochargers, emissions and thermal systems, drivetrain components, and torque management applications and systems. The company's products are sold worldwide, primarily to original equipment manufacturers of passenger cars, SUVs, trucks, and commercial transportation products. BorgWarner has manufacturing and technical facilities in many regions and countries, including North America, Europe, India, South Korea, Japan and Brazil. BorgWarner has been rated a buy since February 2003. While the company is currently trading at a premium, we feel that its various strengths justify the price levels. The company reported record sales and earnings for the first quarter of fiscal 2008. Sales were up 17% from the year-ago quarter, with sales outside of the U.S. growing 15% year-over-year. Earnings per share improved 50% over the first quarter of fiscal 2007, rising from 50 cents to 75 cents. Total revenue grew 17% year over year. Additionally, the company has been very successful at managing debt levels, based on its low debt-to-equity ratio of 0.29.
BorgWarner reaffirmed its previous fiscal 2008 earnings guidance in the range of $2.85 to $3.00 a share. Such results would reflect earnings growth of 20% to 25% when compared with fiscal 2007. The company's future results could, however, be negatively impacted by a variety of risks and uncertainties, including fluctuations in foreign and domestic vehicle production, fluctuations in demand for vehicles containing BorgWarner's products, and changes in general economic conditions. Balchem ( BCPC - Get Report) develops, manufactures and markets specialty performance ingredients and products for the food, feed, and mechanical sterilization industries. Balchem produces choline products for both human and animal consumption. Choline, a vitamin-B complex, plays a vital role in the metabolism of fat and the building and maintaining of cell structures. Choline deficiency can result in reduced growth and perosis (a disease characterized by a deformity of the leg joint) in poultry and fatty liver, kidney necrosis and general poor health in swine, among other symptoms. In humans, choline is recognized as playing a key role in the structural integrity of cell membranes, the processing of dietary fat, reproductive development and neural functions such as memory and muscle function. Balchem also produces encapsulated performance ingredients for use throughout the food and animal-health industries in end products such as baked goods, refrigerated and frozen dough, processed meats, seasoning blends and confections. These performance ingredients are used to enhance nutritional fortification and improve shelf life of prepared products. Our buy rating for Balchem has not changed since June 2003. The company reported record quarterly results in net sales and net earnings for the first quarter of fiscal 2008. Balchem achieved net sales of $56.9 million, reflecting a 35% increase compared to the same quarter one year prior. Net earnings increased 35% year over year to $4.6 million. As a result, the company's EPS increased 32% to 25 cents a share from 19 cents a share in the first quarter of 2007.
Management reported that the integration of several acquisitions made during fiscal 2007 have gone well, and stated that the first quarter results did not yet reflect the company's full expectations for those acquisitions. Additionally, management noted again that rising raw material costs are expected to remain a challenge for Balchem in the near term. While the company has taken pricing steps to counteract the effects of these increased input costs, the actions taken in the first quarter did not offset all the cost increases, primarily due to timing. Overall, management expects the remainder of fiscal 2008 to continue to bring double digit increases in sales and earnings. Bear in mind, however, that global economic issues could impact results. 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.