Top 5 Value Stocks: Church & Dwight

TSC Ratings provides exclusive stock, ETF and mutual fund recommendations using proprietary tools. Our "safety first" approach aims to reduce risk while achieving performance on a total return basis.

The following so-called value companies have annual revenue above $500 million, below-average valuations, debt that is less than 49% of total capital, and receive "buy" ratings from our proprietary quantitative model, which considers more than 60 factors. They are ordered by their potential to appreciate.

New Jersey Resources ( NJR) is an energy-services company that provides retail and wholesale energy services to customers in New Jersey and other states from the Gulf Coast to New England and Canada.

The numbers: Fiscal second-quarter revenue declined 20% to $938 million as net income and earnings per share surged 183% to $36 million and 83 cents, respectively. The debt-to-equity ratio remained low at 0.6, but a quick ratio of 0.4 indicates a weak cash position. Margins improved significantly during the quarter, with operating margin climbing past 6% and net margin jumping to 4%.

The stock: New Jersey Resources has fallen 4% in 2009, underperforming the Dow Jones Industrial Average and the S&P 500. The stock trades at a fair price-to-earnings ratio of 14 and offers an attractive 3.3% dividend yield.

Church & Dwight ( CHD) makes and markets household, personal-care and specialty products around the world.

The numbers: First-quarter revenue rose 5% to $581 million as net income increased 11% to $62 million and earnings per share climbed 9% to 88 cents, hurt by a higher share count. Operating margin improved from 17% to 20% and net margin increased from 10% to 11%. Church & Dwight has an adequate liquidity position, as reflected by a quick ratio of 1.1. And a debt-to-equity ratio of 0.6 demonstrates conservative leverage.

The stock: Church & Dwight is flat in 2009, underperforming the Dow and S&P 500. The stock trades at an expensive price-to-earnings ratio of 20 and offers a dividend yield under 1%.

UGI ( UGI) engages in the distribution and marketing of energy products and services in the U.S. and internationally. The company also operates a heating, ventilation, air conditioning and refrigeration business serving customers in the Mid-Atlantic region.

The numbers: Fiscal second-quarter revenue dropped 9.5% to $2.1 billion as net income increased 25% to $158 million and earnings per share improved 24% to $1.45, continuing a trend of positive growth for eight consecutive quarters. A quick ratio of 0.9 indicates a less-than-ideal liquidity position and a debt-to-equity ratio of 1.5 reflects sizable leverage. Operating margin improved to 17% and net margin moved past 7%.

The stock: UGI has climbed 6% in 2009, outperforming the Dow and S&P 500. Still, the stock trades at a price-to-earnings ratio under 10, indicating a significant discount to the market, and offers a 3.1% dividend yield.

Diamond Foods ( DMND) processes and markets culinary, snack, in-shell and ingredient nuts that are sold through two main product lines: Diamond of California and Emerald Nuts.

The numbers: Fiscal third-quarter revenue ascended 11% to $111 million as net income increased 144% to $2.7 million and earnings per share improved 128% to 16 cents, establishing an eight-quarter streak. Operating margin increased to 6% and net margin exceeded 2%. Just $1.5 million of cash and a quick ratio of 0.3 indicate weak liquidity. But a debt-to-equity ratio of 0.7 means conservative leverage.

The stock: Diamond has climbed 25% in 2009, outperforming all major U.S. indexes. The stock trades at a price-to-earnings ratio around 19 and has a dividend yield under 1%.

Enterprise Products Partners ( EPD) is a midstream energy company that provides services to producers and consumers of natural gas, NGLs, crude oil and petrochemicals in the U.S., Canada and the Gulf of Mexico.

The numbers: First-quarter revenue fell 40% to $3.4 billion as net income weakened 13% to $225 million and earnings per share fell 20% to 41 cents. A quick ratio of 0.6 and a debt-to-equity ratio of 1.5 indicate a less-than-ideal financial position. However, margins improved significantly during the quarter, with operating margin climbing to 11% and net margin jumping to 7%.

The stock: Enterprise Products has climbed 35% in 2009, outperforming all major U.S. indexes. Yet, at its current price, the stock still offers a cash distribution yield of 7.8%. Cash distributions are taxed differently than dividends.

TSC Ratings was given an award for "Best Stock Selection" amongst independent research providers by BNY ConvergEx Group. A rating can be viewed for any stock through our screener. Each rating is derived from a variety of fundamental and pricing figures and represents our opinion of risk-adjusted performance relative to a 5,000-plus stock coverage universe. However, the rating does not incorporate all factors that can alter a stock's performance, such as corporate or industry events, technology innovations and shifts in competitive dynamics.

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