TSC Ratings provides exclusive stock, ETF and mutual fund recommendations using proprietary tools. Our "safety first" approach aims to reduce risk while achieving total return performance.The following large-cap companies have market values of more than $10 billion and receive "buy" ratings from our proprietary quantitative model, which considers more than 60 factors. The stocks are ordered by their potential to appreciate. McDonald's ( MCD) franchises and operates restaurants worldwide, offering food, soft drinks, coffee and other beverages. The numbers: First-quarter revenue declined 10% to $5.1 billion, but net income increased marginally to $980 million and earnings per share jumped 7% to 87 cents as the net margin remained strong at 20%. A 32% decline in the cash balance to $2 billion is a weakness. But a quick ratio of 1.3 and a debt-to-equity ratio of 0.8 indicate a conservative financial position. The stock: McDonald's has declined 7% in 2009, underperforming the Dow Jones Industrial Average and S&P 500 The stock trades at a price-to-earnings ratio of 15 and offers an attractive dividend yield of 3.4%. Oracle ( ORCL) develops and sells database, middleware and application software worldwide. The numbers: Fiscal fourth-quarter revenue declined 5% to $6.9 billion as net income fell 7% to $1.9 billion. But earnings per share decreased just 3%, helped by a lower share count. The operating margin improved to 43% as the net margin dropped to 28%. The company holds $13 billion of cash reserves, amounting to a quick ratio of 1.9. And its debt-to-equity ratio is conservative at 0.4. The stock: Oracle has increased 21% in 2009, in line with the Nasdaq. The stock trades at a price-to-earnings ratio of 19 and doesn't consistently pay dividends.
Colgate-Palmolive ( CL) makes and markets consumer products worldwide. The numbers: First-quarter revenue decreased 6% to $3.5 billion, but net income climbed 9% to $508 million and earnings per share jumped 13% to 97 cents. The company has established a five-quarter streak of earnings growth despite the recession. The gross margin increased during the quarter to 60%. Net operating cash flow ascended 21% and the cash balance improved 9% to $702 million. The stock: Colgate-Palmolive has climbed 8% in 2009, outperforming the Dow and S&P 500. The stock trades at an expensive price-to-earnings ratio of 20 and offers a 2.4% dividend yield. Medco Health Solutions ( MHS) is one of the nation's largest pharmacy benefit managers, providing sophisticated traditional and specialty benefit programs. The numbers: First-quarter revenue rose 14% to $15 billion, beating the industry average growth rate of 1.1%. Net income increased 8% to $291 million and earnings per share improved 16% to 58 cents. Net operating cash flow advanced 607%. The company has added $1.3 billion to the cash balance since the prior year's first quarter. The stock: Medco has ascended 13% in 2009, outperforming the Dow and S&P 500. The stock trades at a price-to-earnings ratio of 21 and doesn't pay dividends. 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 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, with the operating margin climbing to 11% and the net margin jumping to 7%.
The stock: Enterprise Products has surged 35% in 2009, outperforming all major U.S. indexes. Yet, at its current price, the stock offers a cash distribution yield of 8.2%. Cash distributions are taxed differently than dividends. TSC Ratings was given an award this year for "Best Stock Selection" among independent research providers by BNY ConvergEx Group. A rating can be viewed for any stock through our screener. Ratings are derived from a variety of fundamental and pricing figures and represent our opinion of risk-adjusted performance. However, the rating doesn't incorporate all factors that can alter a stock's performance.