BOSTON ( TheStreet) -- These companies have more than $500 million in annual revenue, below-average valuations, debt that's less than 49% of total capital and "buy" ratings from our quantitative model, which considers more than 60 factors. They're ordered by their potential to appreciate, starting with the company with the best growth prospects.

MGE Energy ( MGEE) is a Wisconsin-based electricity provider.

The numbers: Second-quarter net income dropped 6% to $10 million, or 43 cents a share. Revenue decreased 14% to $108 million. Its gross margin rose from 23% to 25%, and its operating margin climbed from 15% to 16%. A quick ratio of 0.3 demonstrates weak liquidity. A debt-to-equity ratio of 0.7 is below the industry average, indicating restrained leverage.

The stock: MGE has advanced 10% this year, less than the Dow Jones Industrial Average and S&P 500 Index. The stock trades at a price-to-earnings ratio of 15, a discount to the market and utility peers. The shares pay a 4.1% dividend yield.

W.W. Grainger ( GWW) sells a wide array of commercial equipment, including duct tape, office furniture and air compressors.

The numbers: Third-quarter net income increased 3% to $145 million, or $1.88 a share. Revenue fell 14% to $1.6 billion. Its gross margin was unchanged at 42%, and its operating margin declined from 13% to 12%. The company has a strong financial position, with $672 million of cash and $535 million of debt.

The stock: Grainger is up 21% this year, matching the S&P 500. The stock trades at a price-to-earnings ratio of 17, a discount to the market and distributor peers. The shares pay a 1.9% dividend yield.

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