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.

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.

Perrigo ( PRGO) is a global health care supplier that manufactures over-the-counter pharmaceutical and nutritional products for the store brand market. The company also develops and manufactures generic prescription drugs, active pharmaceutical ingredients and consumer products.

We have rated Perrigo a buy since March 2007 due to a variety of strengths. For the fourth quarter of fiscal 2008, the company reported that its revenue rose 32.3% year over year. This growth appears to have trickled down to the company's bottom line, boosting earnings per share from 20 cents in the fourth quarter of fiscal 2007 to 30 cents in the most-recent quarter. Net income also increased, rising 46.5% when compared with the same quarter last year. In addition, Perrigo increased its net operating cash flow by 106.00% year over year.

Management was pleased to announce that its team's efforts resulted in fiscal 2008's sales and earnings results being the best in the company's 120 year history. The company intends to grow its business while maintaining a focus on quality in 2009. While Perrigo may harbor some minor weaknesses, we do not see these as having any significant impact on its future financial results.

American Ecology ( ECOL) is one of the nation's oldest providers of radioactive, hazardous and industrial waste management services. The company's customers are commercial and government entities, such as nuclear power plants, medical and academic institutions, steel mills, refineries and chemical production facilities.

We have rated American Ecology a buy since October 2005. The company reported record operating results for the second quarter of fiscal 2008, as operating income rose 20% year over year to $9.8 million. Net income also climbed 20%, reaching $6.1 million compared with $5.1 million in the same quarter one year prior, due to strong growth in disposal service revenue as the Idaho, Nevada, and Texas waste facilities increased the amount of waste disposed by 18% year over year. However, lower transportation revenue partially offset the increase in disposal service revenue. American Ecology also reported a 17% increase in gross profit for the second quarter, and the company had no debt at quarter end. In addition, the company declared a quarterly dividend of 18 cents per common share, which was a 20% increase from the prior-quarterly dividend of 15 cents per common share.

Looking ahead, the company announced that it expects to reach or possibly surpass its previously announced fiscal 2008 earnings guidance of $1.17 to $1.23 per diluted share. Management cautioned that the company will require a strong second half contribution from the thermal desorption recycling service that was initiated in late June, along with solid even business results if it is to exceed its guidance range.

Westinghouse Air Brake Technologies ( WAB) provides value-added, technology-based equipment and services for the global rail industry. Wabtec's highly engineered products, which are intended to enhance safety, improve productivity and reduce maintenance costs for customers, can be found on virtually all U.S. locomotives, freight cars and subway cars.

Wabtec has been rated a buy since March 2005. The company's strengths can be seen in a variety of areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures, good cash flow from operations, impressive record of earnings per share growth and compelling growth in net income. For the second quarter of fiscal 2008, the company's revenue increased 19.8% year over year. This growth contributed to 21.1% improvement in earnings per share (EPS), which rose from 57 cents a year ago to 69 cents in the most-recent quarter. Net income also increased, rising 20.0% when compared with the same quarter last year. In addition, net operating cash flow increased 757.52% to $64.07 million.

Wabtec's management credited international and aftermarket expansion with helping to drive growth for the company's second quarter. While the company is currently trading at a premium to its peers, we feel that its strengths justify the current valuation.

II-VI ( IIVI) develops, manufactures and markets high technology materials and derivative products for precision use in industrial, medical, military, security and aerospace applications.

Our rating for II-VI has been in place since October 2006. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures, notable return on equity, reasonable valuation levels and solid stock price performance. For the fourth quarter of fiscal 2008, the company reported revenue growth of 31.4% year over year. This growth helped boost earnings per share from 37 cents in the fourth quarter of fiscal 2007 to 50 cents in the most-recent quarter. II-VI has a low debt-to-equity ratio of 0.01, indicating very successful management of debt levels. Along with this, the company demonstrates the ability to cover its short-term cash needs, based on a quick ratio of 2.77.

Powered by its strong earnings growth of 35.13% and other important driving factors, this stock has surged by 26.09% over the past year. We feel that the company's strengths outweigh the fact that it shows weak operating cash flow.

Team ( TISI) provides specialized industrial services including on-stream leak repair, hot tapping, fugitive emissions control monitoring, field machining, technical bolting, field valve repair, field heat treating, and non-destructive testing/examination inspection services. These services are provided at 60 locations throughout the United States, as well as 14 international locations.

We have rated Team a buy since January 2007, based on its revenue growth, largely solid financial position, and impressive record of earnings per share growth, among other strengths. For the fourth quarter of fiscal 2008, Team reported revenue growth of 49.6% year over year. This appears to have helped boost EPS, which rose 49.2% since the same quarter a year ago, rising from 32 cents to 47 cents. Team has demonstrated a pattern of positive EPS growth over the past two years, and we feel that this trend should continue. Net income also increased in the fourth quarter, rising 53.9% from $6.08 million to $9.36 million. In addition, the stock price has surged 35.30% over the past year, largely due to earnings growth of 49.20%.

Management was pleased with what it said were record results in the fourth quarter. Because of these results and the company's growth, management remained positive about Team's outlook for fiscal 2009. Full-year revenue is expected to be in the range of $530.00 million to $545.00 million, with net income anticipated in the range of $1.45 to $1.60 per fully diluted share. We feel that the company's strengths outweigh the fact that it shows weak operating cash flow.

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 a rating alone cannot tell the whole story and should be part of an investor's overall research.
This article was written by a staff member of TheStreet.com Ratings.

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