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. Energen ( EGN) is an energy holding company that engages in the acquisition, development, exploration and production of oil, natural gas and natural gas liquids in the U.S. The company has two subsidiaries, Energen Resources and Alabama Gas. Energen Resources, which explores for and produces oil and gas, generates about 85% of the company's consolidated net income. Alabama Gas is the largest natural gas distributor in Alabama. Energen is based in Birmingham, Ala. Energen has been rated a buy since January 2006. A number of positive investment measures should help this stock outperform the majority of stocks that we rate. Energen's revenue increased slightly in the first quarter of fiscal 2008, rising 5.9% year over year. This growth appears to have helped boost the company's earnings per share by 12.5% year over year. In addition, net income improved, rising 12.3% from $103.88 million a year ago to $116.69 million in the first quarter. Energen's expanding profit margins are also strengths, as the company reported that its gross profit margin increased to 45.60% compared with 42.87% in first quarter of 2007.
Management 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 in order to help lock in earnings and cash flow growth. Additionally, management announced its new earnings guidance for fiscal 2008, with earnings per diluted share now estimated to be in the range of $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. Strayer Education ( STRA - Get Report) is a for-profit post-secondary education services corporation. The company's mission is to make high-quality, post-secondary education achievable and convenient for working adults in today's economy. Strayer offers a variety of academic programs through wholly-owned Strayer University. Programs are offered in both a classroom setting and through Strayer University Online. The university was founded in 1892, and today it offers undergraduate and graduate degree programs in business administration, accounting, information technology, education and public administration at 57 physical campuses in Pennsylvania, Delaware, Maryland, Washington, D.C., Virginia, North Carolina, South Carolina, Georgia, Tennessee and Florida. The Strayer University Online program provides a flexible and convenient option for working adults worldwide to take college courses. Our buy rating for Strayer has not changed since March 2003, and it is based on a variety of strengths that include the company's revenue and net income growth and its largely solid financial position. For the first quarter of fiscal 2008, Strayer's revenue rose 21.1% year over year because of increased enrollment and a 5% tuition increase that went into effect in January 2008. As a result, earnings per share improved 26.1%, while net income increased 25.1% from $18.81 million in the first quarter of fiscal 2007 to $23.52 million. Another favorable sign for the company is that it is debt free, resulting in a debt-to-equity ratio of zero.
Strayer is working to expand its geographic footprint and expand student enrollment. It recently opened two new campuses for the summer term in new Florida markets. The company has now opened six of the nine new campuses planned for 2008. Because of its strong enrollment growth of 19% for the spring term, management estimates that second-quarter 2008 diluted EPS will be in the range of $1.45 to $1.47. However, these projected results could be negatively affected should the company fail to increase student enrollment or successfully implement its growth strategy. Badger Meter ( BMI - Get Report) manufactures and markets flow measurement and control products. These products measure a variety of liquids, such as water, oil and lubricants. The company serves utilities, municipalities and industrial customers worldwide. Badger operates in two business segments, utility and industrial. The utility products are used by both public and private water systems, while the industrial products provide flow measurement solutions in a variety of specialty industries including petroleum, food and beverage, pharmaceutical and concrete. The company was founded in 1905 and has major U.S. facilities in Wisconsin and Oklahoma. Foreign facilities are located in Mexico, Germany and the Czech Republic. Badger has been rated a buy since August 2003. The company's strengths include its revenue growth, net income growth and return on equity. For the first quarter of 2008, Badger's revenue rose by 29.9% year over year. This growth appears to have helped boost earnings per share, which improved significantly in the first quarter, rising from 17 cents in the first quarter of 2007 to 41 cents. Net income increased by 134% over the same period, rising from $2.57 million to $6.02 million. Finally, return on equity has improved slightly from 18.6% to 22.3%.
Powered by its strong earnings growth of 141.2% and other important driving factors, this stock has surged by 51.6% over the past year. While this makes the stock somewhat expensive compared to the rest of its industry, we felt that the company's strengths justify the higher price levels at this time. Bear in mind, however, that Badger's future performance could be affected by any regulatory changes, especially those dealing with the use of lead, which is used in the manufacture of certain meters, or the use and/or licensing of radio frequencies that are necessary for the company's automatic meter reading and advanced metering infrastructure products. Badger's future results could also be affected by the overall health of the U.S. economy, including housing starts and overall industrial activity, and any changes in foreign economic conditions, including currency exchange rates. Berry Petroleum ( BRY) is an independent energy company that produces, develops, acquires, exploits and explores for crude oil and natural gas. The company 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. Berry's strengths can be seen in multiple areas, including its growth in revenue and net income. Revenue grew 57.8% year over year in the first quarter of fiscal 2008. This appears to have helped boost earnings per share, which improved to 95 cents from 42 cents in the first quarter of fiscal 2007. Net income surged 128.2% when compared with the same period one year prior, rising from $18.86 million to $43.03 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 as they anticipate more cash from operations than will be spent on capital expenditures in 2008. Powered by its strong earnings growth of 126% and other important driving factors, this stock's price has surged 41.8% over the past year, and we feel that the stock could move higher despite having already enjoyed nice gains. We feel that Berry's strengths outweigh the fact that the company has had a somewhat disappointing return on equity. However, it is important to remember that any stock can fall in a major bear market. Flowserve ( FLS - Get Report) engages in the development, manufacture, and sale of precision-engineered flow equipments through three divisions: Flowserve Pump, Flow Control and Flow Solutions. The company operates worldwide in more than 56 countries, with 43% of its revenue coming from North America. We have rated Flowserve a buy since January 2007 on the basis of several positive investment measures, such as the company's 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 revenue rose 23.6% year over year in the first quarter, largely because of strong sales in the oil and gas markets. The company also reported that fully diluted earnings per share improved 159%, rising from 59 cents a year ago to $1.53. Furthermore, net income increased 162%, rising from $33.61 million to $88.07 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 it 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. 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.