Each business day, TheStreet.com Ratings TheStreet.com Ratings compiles a list of the top five stocks in one of five categories -- fast-growth, all-around value, large-cap, mid-cap and small-cap -- 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. HMS Holdings ( HMSY) provides a variety of cost containment and payment accuracy services relating to government healthcare programs. We have rated this stock a buy since September 2004 on the basis of such strengths as the company's largely solid financial position, good cash flow from operations, and growth in revenue, net income, and earnings per share.
For the fourth quarter of fiscal 2008, the company reported that its earnings surged 74.9% on higher revenue. Net income rose from $4 million in the fourth quarter of fiscal 2007 to $7.1 million in the most recent quarter. Revenue increased 25.8% year over year, greatly exceeding the industry average of 7%. This increase, led by strong revenue growth in each of the government healthcare program markets, appears to have helped boost EPS, which showed significant improvement over the same quarter a year ago, rising from 15 cents to 26 cents per share. HMS Holdings has a very low debt-to-equity ratio of 0.1, which implies that it has successfully managed its debt levels. In addition, a quick ratio of 3.2 clearly demonstrates an ability to cover short-term cash needs. Finally, net operating cash flow increased 17.5% when compared to the same quarter of last year.Having had a record year in terms of revenue growth and profitability, the company expects to see strong results continue into the next fiscal year. Looking ahead to fiscal 2009, HMS Holdings raised its earnings outlook to $1 per share from previous guidance of 96 cents per share. The company is currently trading at a premium valuation, but we feel that the strengths detailed above justify the higher price at this time. NCI ( NCIT) is a provider of information technology (IT) services and solutions to U.S. federal government agencies. The company focuses on designing, implementing, maintaining, and upgrading IT systems and networks. NCI has been rated a buy since February 2008 based on its healthy growth in revenue and net income, solid stock price performance, impressive record of EPS growth, and return on equity. For the fourth quarter of fiscal 2008, the company reported that its revenue rose 15.2% year over year, slightly outpacing the industry average of 13.5%. This growth appears to have helped boost EPS, which rose 44% when compared to the same quarter last year. The company's EPS growth is a continuation of a pattern of positive EPS growth over the past two years. Net income also improved, increasing 48.2% from $3.3 million to $5 million. Return on equity improved slightly when compared to a year ago, and can therefore be considered a modest strength for NCI. In addition, NCI's stock price has surged 89.7% over the past year, due to strong earnings growth and other key factors.
Management stated that it felt NCI had great results for fiscal 2008, remaining on track with its strategic plan. The company expects further growth in fiscal 2009 due to new business won in 2008, such as the $173 million ITES-2S task order with the Army National Guard and Air National Guard awarded to NCI in December. Looking ahead, the company expects first quarter 2009 EPS in the range of 31 cents to 33 cents per share, on revenue of $102 million to $107 million. Although the company shows weak operating cash flow, we believe that the strengths detailed above outweigh any potential weakness at this time.Myriad Genetics ( MYGN) is a biopharmaceutical company focused on molecular diagnostic and therapeutic products, conducting research in the fields of cancer, Alzheimer's disease, and infectious diseases like AIDS. We have rated the stock a buy since August 2008. Our rating is based on a variety of strengths, such as the company's growth in revenue, net income, and EPS, its solvency, and its stock performance. For the second quarter of fiscal 2009, Myriad reported revenue growth of 48.7% year over year, which surpassed the Biotechnology industry's average of 23.7%. This growth appears to have helped boost EPS, which improved significantly when compared to the same quarter a year ago. EPS rose from a loss of 11 cents to a profit of 43 cents per share. We believe that the company should continue to show positive EPS growth in the future. Net income surged 518.5% in the second quarter, rising from a loss of $5.1 million to a profit of $21.2 million. Myriad's return on equity is a sign of significant strength within the company, as it increased greatly in comparison with the prior year's quarter. In addition, a debt-to-equity ratio of zero is a further favorable sign for the company, while its quick ratio of 7 clearly demonstrates the ability to cover short-term cash needs.
Although no company is perfect, we do not currently see any significant weaknesses that are likely to detract from the generally positive outlook for Myriad.Ralcorp Holdings ( RAH) is a Missouri-based company that manufactures, distributes, and markets store-brand (private label) food products in the grocery, mass merchandise, drug, and foodservice channels. Ralcorp has been rated a buy since February 2004. The rating is supported by the company's strong revenue, improved margins, higher earnings, and healthy cash balance. For the first quarter of fiscal 2009, the company reported that its revenue increased 48.8% year over year, driven by higher pricing and the acquisition of Post Foods. A decline in EPS implies that this growth did not appear to trickle down to the bottom line, but the company was still able to report a 54.5% surge in overall net income. Ralcorp displayed strong fundamentals in the first quarter, with cash and cash equivalents rising 35.2% and net operating cash flow improving 77% when compared to the same quarter last year. In addition, a low debt-to-equity ratio of 0.6 implies relatively successful debt management, especially given the improvement from a ratio of 1.43 a year ago. Compared to where it was trading a year ago, RAH's share price has not changed very much. This can be attributed to a variety of factors, including the company's EPS results and the relatively weak year-over-year performance of the overall market. Although rising interest expenses and deteriorating return on equity could restrict Ralcorp's future financial performance, we expect that in most economic environments this stock still has good upside potential. It goes without saying, though, that even the best stocks can fall in an overall down market.
Haemonetics ( HAE) is a global leader in blood processing technology, designing, manufacturing, and marketing automated blood processing systems and single use consumables for blood donors and surgical patients. Our buy rating for Haemonetics has been in place since February 2004, based on such strengths as the company's robust revenue growth, largely solid financial position, improvement in net income and EPS, and solid stock price performance.For the third quarter of fiscal 2009, the company reported on Feb. 2 that its revenue rose 15.5% year over year, with double-digit growth recorded across all geographies. This improvement slightly outpaced the industry average of 13.6%. It also appears to have trickled down to the company's bottom line, as EPS increased 14.8% when compared to the same quarter a year ago. Net income grew 13.1%, rising from $14.3 million to $16.2 million. Haemonetics has a very low debt-to-equity ratio of 0.02, implying that it has successfully managed its debt levels. In addition, a quick ratio of 2.9 indicates that the company has the ability to cover its short-term cash needs. Due to stronger-than-planned sales of plasma disposables, blood bank disposables, and equipment and the strong third quarter revenue results from all geographies, Haemonetics raised its full year revenue guidance. The company now anticipates revenue growth of 15% to 16%, up from previously announced expectations for 12% to 14% full year revenue growth. The company shows somewhat disappointing return on equity, but we feel that the strengths detailed above outweigh any potential weakness at this time. Our quantitative rating, which can be viewed for any stock through our stock screener stock rating screener, 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.