3 Stocks Reiterated As A Buy: CAT, BIDU, QCOM

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

NEW YORK ( TheStreet) -- TheStreet Ratings team reiterated 3 stocks with a buy rating on Wednesday based on 32 different data factors including general market action, fundamental analysis and technical indicators. The in-depth analysis of these ratings decisions goes as follows:

Caterpillar Inc:

Caterpillar (NYSE: CAT) has been reiterated by TheStreet Ratings as a buy with a ratings score of B+. According to TheStreet Ratings team: The company's strengths can be seen in multiple areas, such as its solid stock price performance, increase in net income, good cash flow from operations and growth in earnings per share. We feel these strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated.

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Highlights from the ratings report include:
  • Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period. Although other factors naturally played a role, the company's strong earnings growth was key. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and greatly outperformed compared to the Machinery industry average. The net income increased by 43.9% when compared to the same quarter one year prior, rising from $697.00 million to $1,003.00 million.
  • Net operating cash flow has increased to $2,580.00 million or 30.36% when compared to the same quarter last year. In addition, CATERPILLAR INC has also modestly surpassed the industry average cash flow growth rate of 27.90%.
  • CATERPILLAR INC has improved earnings per share by 48.1% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, CATERPILLAR INC reported lower earnings of $5.75 versus $8.49 in the prior year. This year, the market expects an improvement in earnings ($5.90 versus $5.75).
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 17.2%. Since the same quarter one year prior, revenues fell by 10.4%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.

Caterpillar Inc. manufactures and sells construction and mining equipment, diesel and natural gas engines, industrial gas turbines, and diesel-electric locomotives worldwide. Caterpillar has a market cap of $65.5 billion and is part of the industrial goods sector and industrial industry. Shares are up 14.2% year-to-date as of the close of trading on Tuesday.

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Baidu Inc:

Baidu (Nasdaq: BIDU) has been reiterated by TheStreet Ratings as a buy with a ratings score of B. According to TheStreet Ratings team: The company's strengths can be seen in multiple areas, such as its robust revenue growth, growth in earnings per share, largely solid financial position with reasonable debt levels by most measures, solid stock price performance and expanding profit margins. Although the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results.

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Highlights from the ratings report include:
  • BIDU's very impressive revenue growth greatly exceeded the industry average of 11.7%. Since the same quarter one year prior, revenues leaped by 55.2%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • BAIDU INC's earnings per share improvement from the most recent quarter was slightly positive. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, BAIDU INC increased its bottom line by earning $4.96 versus $4.78 in the prior year. This year, the market expects an improvement in earnings ($31.76 versus $4.96).
  • Despite currently having a low debt-to-equity ratio of 0.46, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Even though the debt-to-equity ratio shows mixed results, the company's quick ratio of 3.78 is very high and demonstrates very strong liquidity.
  • Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 74.13% over the past year, a rise that has exceeded that of the S&P 500 Index. Looking ahead, the stock's sharp rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
  • The gross profit margin for BAIDU INC is rather high; currently it is at 66.01%. Regardless of BIDU's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, BIDU's net profit margin of 29.36% compares favorably to the industry average.

Baidu, Inc. provides Internet search services. Baidu has a market cap of $56.1 billion and is part of the technology sector and internet industry. Shares are down 8.4% year-to-date as of the close of trading on Tuesday.

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Qualcomm Inc:

Qualcomm (Nasdaq: QCOM) has been reiterated by TheStreet Ratings as a buy with a ratings score of A. According to TheStreet Ratings team: The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, notable return on equity, good cash flow from operations and solid stock price performance. We feel these strengths outweigh the fact that the company has had sub par growth in net income.

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Highlights from the ratings report include:
  • QCOM's revenue growth has slightly outpaced the industry average of 1.1%. Since the same quarter one year prior, revenues rose by 10.0%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • QCOM's debt-to-equity ratio is very low at 0.00 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with this, the company maintains a quick ratio of 3.50, which clearly demonstrates the ability to cover short-term cash needs.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Communications Equipment industry and the overall market, QUALCOMM INC's return on equity exceeds that of both the industry average and the S&P 500.
  • Net operating cash flow has increased to $2,781.00 million or 40.81% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 20.01%.
  • Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.

QUALCOMM Incorporated designs, develops, manufactures, and markets digital communications products and services based on code division multiple access (CDMA), orthogonal frequency division multiple access (OFDMA), and other technologies. Qualcomm has a market cap of $136.9 billion and is part of the technology sector and telecommunications industry. Shares are up 8.6% year-to-date as of the close of trading on Tuesday.

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