TheStreet.com 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.BOSTON ( TheStreet) -- The following 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. Church & Dwight ( CHD) sells household products, including Arm & Hammer Baking Soda and Brillo Pads. The numbers: Second-quarter net income increased 27% to $58 million and earnings per share climbed 23% to 88 cents, restrained by a higher share count, as revenue jumped 5% to $623 million. The operating margin ascended from 14% to 16% and the net margin advanced past 9%. A quick ratio of 1.2 demonstrates ample liquidity and a debt-to-equity ratio of 0.5 indicates conservative leverage. The stock: Church & Dwight is up 2% in 2009, underperforming the Dow Jones Industrial Average and S&P 500 Index. The stock trades at an expensive price-to-earnings ratio of 19 and offers a dividend yield below 1%. The company's record of consistent earnings growth, regardless of economic conditions, makes it an attractive investment. Sykes ( SYKE) provides customer-contact-services. The numbers: Second-quarter earnings dropped 19% to $14 million, or 35 cents a share, as revenue increased marginally to $209 million. The operating margin rose from 8% to 9%, but the net margin declined from 9% to 7%. Sykes has an outstanding financial position, with zero debt and ample cash reserves. We give the company a financial strength score of 8 out of 10. The stock: Sykes has advanced 10% in 2009, beating the Dow and S&P 500. The stock trades at an attractive price-to-earnings ratio of 15, but doesn't pay dividends.
Village Super Market ( VLGEA) operates a chain of ShopRite supermarkets in the U.S. The numbers: Fiscal third-quarter net income increased 25% to $6.3 million and earnings per share climbed 24% to 47 cents as revenue increased 7% to $293 million. Same-store sales, an important gauge of improvement, jumped more than 7%. The company has a modest $36 million debt load and over $47 million of cash, which works out to a quick ratio of 0.8 and a debt-to-equity ratio of 0.2. The stock: Village Super Market has climbed 2% in 2009, underperforming major U.S indices. The stock trades at a fair price-to-earnings ratio of 17 and offers a 2.9% dividend yield. J.M. Smucker ( SJM) sells food products, including jams and jellies, in the U.S., Europe and Canada. The numbers: Fiscal fourth-quarter net income increased 154% to $94 million, but earnings per share climbed just 20% to 80 cents, hampered by a larger share count, as revenue rose 81% to $1.1 billion. The operating margin advanced from 11% to 19% and the net margin jumped from 6% to 9%. A quick ratio of 0.7 indicates a less-than-ideal liquidity position, but Smucker has added $273 million to the cash balance since the year-earlier quarter. A debt-to-equity ratio of 0.3 demonstrates modest leverage. The stock: J.M. Smucker has soared 18% in 2009, more than the Dow and S&P 500. The stock trades at a fair price-to-earnings ratio of 16 and offers a 2.7% dividend yield, lower than the average of S&P 500 companies. General Mills ( GIS) manufactures branded and packaged foods worldwide.
The numbers: Fiscal fourth-quarter revenue increased 5% to $3.6 billion as earnings doubled to $358 million, or $1.07 a share. The operating margin climbed from 9% to 20% and the net margin jumped from 5% to 10%. General Mills has a weak liquidity position, as reflected by a quick ratio of 0.5, but has added $99 million to the cash balance since the year-earlier quarter. A debt-to-equity ratio of 1.4 indicates high leverage. The stock: General Mills has dropped 5% in 2009, underperforming the Dow and S&P 500. The stock trades at a fair price-to-earnings ratio of 15 and offers a 3.3% dividend yield. -- Reported by Jake Lynch in Boston.