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. Ametek ( AME - Get Report) manufactures electronic instruments and electromechanical devices. The company has operations throughout the U.S. and in more than 30 other countries. Its electronic instruments segment manufactures advanced monitoring, testing, calibrating and display instruments for the aerospace, power and industrial markets worldwide. The electromechanical segment produces highly engineered electromechanical connectors for hermetic (moisture-proof) applications; specialty metals for niche markets; and brushless air-moving motors, blowers and heat exchangers. The products are used in floor care and other specialty applications. Ametek has been rated a buy since November 2002. Strengths include its consistent revenue, earnings per share and net income growth, as well as a solid stock performance. In addition, Ametek's minimal exposure to the housing and automobile markets could insulate it from the sluggish U.S. economy. For the first quarter of 2008, the company reported a 30% year-over-year increase in earnings, led by operational improvements and revenue growth of 21%. The company improved EPS to 62 cents in the most recent quarter from 48 cents in the first quarter of 2007, continuing a two-year pattern of earnings improvement. Net income grew to $66.4 million from $50.9 million a year ago. Operating cash flow increased 39% to $77 million. Additionally, the company paid a quarterly dividend of 6 cents a share on March 31.
Going forward, Ametek estimates revenue for the full year 2008 to increase by a percentage in the high teens and estimates earnings in the range of $2.47 to $2.52 per share. Management also expects earnings for the second quarter to be about 61 cents to 63 cents a share, an increase of 13% to 17% from the second quarter of 2007. However, these results could be negatively affected should the company fail to successfully integrate its recent acquisitions. Other risks include the price and availability of raw materials and changes in the competitive environment. Berry Petroleum ( BRY - Get Report) is an independent energy company that produces, develops, acquires, exploits and explores for crude oil and natural gas. It has producing operations in California, Colorado and Utah, as well as interests in undeveloped and prospective oil and gas leasehold land positions in the western U.S. The company is also expanding into the Rockies and mid-Continent for light oil and natural gas. Berry was founded in 1909, and had 243 employees as of December 2007. Our buy rating for Berry has not changed since June 2003. Strengths can be seen in multiple areas, including growth in revenue and net income. Revenue grew 58% year over year for the first quarter of fiscal 2008. This appears to have helped boost earnings per share, which improved to 95 cents from 42 cents a year ago. Net income more than doubled year over year to $43 million. Management reports that the company is on target to achieve a 10% increase in production and net proved reserves in 2008, in addition to being in an excellent financial position. Powered by strong earnings growth and other factors, this stock's price has surged 42% over the past year, and we feel that it could move higher despite having already enjoyed nice gains. We feel that Berry's strengths outweigh a somewhat disappointing return on equity. However, it is important to remember that any stock can fall in a major bear market.
Energen ( EGN) is a Birmingham, Ala., energy holding company that acquires, develops, explores for and produces oil, natural gas and natural gas liquids in the U.S. The company has two subsidiaries, Energen Resources Corporation and Alabama Gas Corp. Energen Resources, which explores for and produces oil and gas, generates about 85% of the company's consolidated net income. Alabama Gas Corp. is the largest natural gas distributor in Alabama. Energen has been rated a buy since January 2006. Revenue increased 5.9% year over year for the first quarter of fiscal 2008. This growth appears to have helped boost the company's earnings per share 13% in the same period. Energen's expanding profit margins are also strengths. The company reported that its gross profit margin increased to 46%, vs. 43% in first quarter of 2007. Management said it was pleased with the first-quarter results and is excited about Energen's future outlook. The company has capitalized on the recent upward momentum of oil and gas market prices by strengthening its hedge position for 2009 and 2010 production to help lock in earnings and cash flow growth. Additionally, Energen announced its new EPS guidance for fiscal 2008, estimating $4.15 to $4.55 due to the current market strength of commodity prices. However, any significant decline in natural gas and oil prices, along with any unfavorable regulatory movements, could negatively affect the company's business and future profitability. 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 increasing revenue and net income. Additionally, the company reported record results in bookings for the first quarter of fiscal 2008. Flowserve's revenue rose 24% year over year for the first quarter, largely due to strong sales in the oil and gas markets. The company also reported that EPS more than doubled year over year to $1.53. Furthermore, net income increased to $88.07 million from $33.61 million. Additionally, 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 affect Flowserve's results in the future. Sigma-Aldrich ( SIAL) develops, manufactures and distributes a broad range of quality biochemicals and organic chemicals. These chemical products and kits are used in scientific and genomic research, biotechnology, pharmaceutical development and the diagnosis of disease. They are also used as key components in pharmaceutical and other high-tech manufacturing processes. The company operates in 35 countries, with chemical production facilities in Australia, Canada, France, Germany, India, Japan, Singapore, Switzerland, the U.K. and various U.S. states.
Our buy rating for Sigma-Aldrich has been in place since November 2003. For the first quarter of fiscal 2008 net income grew to $84.5 million from $74.9 million in the first quarter of 2007. Sales for the quarter set a record for the company, reaching a new quarterly high of $569.6 million, an increase of 15% year over year. Despite higher tax rates, the company saw 14% year-over-year EPS growth to 64 cents. Management attributes the EPS growth to Sigma-Aldrich's efforts to expand margins through process improvement activities. Finally, cash flow from operations increased 2.3% to $89.6 million. Looking forward, management expects full-year sales for 2008 to meet the company's organic growth goal of 7%. Furthermore, management has raised its 2008 EPS estimate by 5 cents to a range of $2.57 to $2.67. However, bear in mind that changes in pricing due to the competitive environment, fluctuations in foreign currency exchange rates and regulatory changes could affect future 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.