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, all-around-value stocks are in the spotlight.These are stocks of companies that meet a number of criteria, including annual revenue of more than $500 million, lower-than-average valuations such as a price-to-sales ratio of less than 2, and leverage that is less than 49% of total capital. In addition, they must 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. Silgan Holdings ( SLGN) manufactures metal and plastic consumer goods packaging products, including metal food containers, vacuum closures for food and beverage products, and high density polyethylene and polyethylene terephthalate containers for the personal care market. Our buy rating for this stock has been in place since May 2004. The rating is based on such strengths as the company's growth, efficiency, and total return. For the fourth quarter of fiscal 2008, Silgan reported slight revenue growth of 8.4% year over year. This growth appears to have helped boost EPS, which improved 23.1% when compared to the same quarter a year ago, continuing a trend of positive EPS growth. We feel that this trend should continue. Net income also increased in the fourth quarter, rising 22.3% from $19.9 million to $24.4 million. A slight increase in return on equity can be seen as a modest strength for the organization, and the stock's price has risen over the past year, reflecting earnings growth and other positive factors.
Management announced that both fourth quarter and full year earnings were records for the company. Looking ahead to fiscal 2009, the company anticipates adjusted net income per diluted share in the range of $3.75 to $3.95 for the full year. Although the company has shown generally poor debt management, we feel that the strengths indicated here outweigh any weaknesses and justify the stock's high price. Family Dollar Stores ( FDO) operates a chain of almost 6,000 retail discount stores in a 44-state area, providing primarily low to lower-middle income consumers with a wide range of general merchandise at highly competitive prices in convenient neighborhood stores. We have rated the stock buy since July 2008. The rating is based on the company's outstanding fundamentals and recession-resistant business model. The company reported on April 8 that its revenue increased slightly in the second quarter of fiscal 2009, rising 8.7% year-over-year. This growth appears to have helped boost EPS, which improved 33.3% from 45 cents a year ago to 60 cents in the most recent quarter. Family Dollar's net income jumped 32.9%, increasing from $63.6 million to $84.1 million. The company's return on equity has also slightly improved from where it was a year ago. This change from 18.3% to 19.1% can be seen as a modest strength for Family Dollar. The company feels that its second quarter successes are due not only to budget-friendly consumer behavior generated by the current economic conditions, but also by the company's own investments in the enhancement of consumer's shopping experience. Looking forward to the third quarter, the company expects an increase of 7% to 9% in its net sales, along with EPS in the range of 54 cents to 58 cents per share. While we see the company's low profit margins as a potential weakness, we believe that the strengths detailed above justify the buy rating at this time and should continue to help Family Dollar's stock to move higher despite the fact that it has already enjoyed a very nice gain of 82.7% in the past year.
FPL Group ( FPL) through its subsidiaries, engages in the generation, transmission, distribution, and sale of electric energy. It produces electricity through natural gas, wind, nuclear, oil, hydro, and other resources. We have rated the stock a buy since January 2009 due to the company's impressive growth and strong fundamentals. The company's strengths can be seen in multiple areas, such as its growth in revenue and net income, notable return on equity, good cash flow from operations. We feel these strengths outweigh the fact that the company has had generally poor debt management on most measures that we evaluated. Fourth quarter net income increased by 81.7% when compared to the same quarter one year prior, rising from $224 million to $407 million and exceeding the S&P 500 and the electric utilities industry. Net operating cash flow increased to $1 billion or 23.3% compared with the same quarter last year. The company has demonstrated a pattern of positive earnings per share growth over the past two years. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, FPL increased its bottom line by earning $4.07 vs. $3.28 in the prior year. For the next year, the market is expecting a contraction of 0.5% in earnings to $4.05. Although the company has poor debt management and subpar liquidity, as reflected by its .29 quick ratio, we feel that the strengths outlined above outweigh any weaknesses. Elbit Systems ( ESLT) develops, manufactures, and integrates defense electronic and electro-optic systems primarily in Israel, the United States, and Europe. We have rated the stock a buy since April 2007 based on the company's robust revenuegrowth, compelling growth in net income, good cash flow from operations, notable return on equity and impressive record of earnings per share growth.
For the fourth quarter of fiscal 2008, revenue growth came in higher than the industry average of 4.6%. Since the same quarter one year prior, revenues rose by 18.1%. Growth in the company's revenue appears to have helped boost EPS, which improved significantly from 75 cents to $2.48. Although the company has demonstrated a pattern of positive earnings per share growth over the past two years, we anticipate underperformance relative to this pattern in the coming year. Net income increased dramatically in the fourth quarter, rising 229.7% from $31.4 million to $105.3 million. A further sign of significant strength within the corporation is its increasing return on equity, which grew from 14.3% a year ago to 28.2% in the most recent quarter. Net operating cash flow also increased notably in the fourth quarter, rising 106.6% when compared to the same quarter last year. Management stated that Elbit ended 2008 in a strong position, with potential for continued growth. We see the company as having relatively poor debt management on most measures that we evaluated, but nevertheless, we feel that the strengths outlined above outweigh any weaknesses and the stock has strong upside potential, given current market conditions. RehabCare Group ( RHB) provides rehabilitation program management services in hospitals, skilled nursing facilities, outpatient facilities and other long-term care facilities in the United States. We upgraded its stock from hold to buy in March 2009 due to multiple strengths, such as the company's solid stock price performance, largely solid financial position, and growth in net income, revenue and earnings per share. For the fourth quarter of fiscal 2008, the company reported revenue growth of 13.1% year-over-year. This beat the industry average of 5.9%. The company's bottom line seems to have been helped by this growth, as indicated by a 13.8% improvement in RehabCare's EPS when compared to the same quarter last year. We expect the company's trend of positive EPS growth over the past two years to continue. Net income also increased in the fourth quarter, rising 11.8% to $5.70 million. A debt-to-equity ratio of 0.21 implies that RehabCare has successfully managed its debt, while a quick ratio of 1.82 shows that it should be able to cover any short-term liquidity needs. Management credited the turnaround plan for its hospital segment with helping to boost financial results in the fourth quarter, and it was pleased overall with fourth quarter performance. While the company did not provide financial guidance for fiscal 2009, it did state that strong consolidated revenue and net earnings growth is anticipated for the full year. RehabCare's stock price has risen over the past year, reflecting earnings growth and other positive factors such as those cited above, and we see more potential for this stock unless broad bear market conditions prevail in the future. Weak operating cash flow is a cause for concern, but we believe 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.