NEW YORK (TheStreet) -- Are you a risk taker? If you are, a high-beta stock might be for you.

Beta is a popular measure of volatility because it "distills a pretty complicated concept into a single number. If it's above 1, then the stock is 'riskier than the market,' and if it's below 1, then it's 'less risky,'" according to Jonas Elmerraji, a senior market analyst at Agora Financial in Baltimore and a contributor to TheStreet.

"Instead of just saying, 'I made 20% last year,' risk-adjusted returns help answer whether big returns came from good stock picking or simply taking more risk and getting lucky," he explained. "Beta is one of the more popular inputs used to calculate risk-adjusted returns."

Sectors that are more sensitive to the economy or directly to financial markets such as financial services, basic materials, energy and industrials tend to have higher beta measurements, whereas health care, utility and consumer defense stocks tend to have lower beta. These stocks "don't go up as much in a bull market, but they also don't tend to fall off in a bear market," said Matthew Coffina, editor of Morningstar's (MORN - Get Report) StockInvestor newsletter.

But investing in volatile stocks is a lot like riding a roller coaster. When the market is on a roll, taking on more risk in your portfolio can reap big rewards -- but will you have the stomach to deal with potential losses in those investments if the market turns south?

Over the last month, market volatility has come down dramatically from January, in part because oil prices have been sticking around $50 a barrel but also because investors may be resigned to the fact that the Federal Reserve is likely to raise interest rates later this year.

The low volatility means "investors can feel more comfortable owning a portfolio with a higher average beta because those stocks aren't swinging as much," Elmerraji wrote in an email.

But while volatility has been low, there's no guarantee it will stay there.

So which stocks with so-called high beta measurements are also good buys right now? The stocks in this list were chosen through TheStreet Ratings, TheStreet's proprietary ratings tool. The stocks are all in the Russell 2000, rated buy with a grade of A+ and have a beta measurement greater than 1. They are also all high-growth stocks, according to the tool.

TheStreet Ratings projects a stock's total return potential over a 12-month period including both price appreciation and dividends. Based on 32 major data points, TheStreet Ratings uses a quantitative approach to rating over 4,300 stocks to predict return potential for the next year. The model is both objective, using elements such as volatility of past operating revenue, financial strength, and company cash flows; and subjective, including expected equities market returns, future interest rates, implied industry outlook and forecasted company earnings.

Buying an S&P 500 stock that TheStreet Ratings rated a buy yielded a 16.56% return in 2014, beating the S&P 500 Total Return Index by 304 basis points. Buying a Russell 2000 stock that TheStreet Ratings rated a buy yielded a 9.5% return in 2014, beating the Russell 2000 index, including dividends reinvested, by 460 basis points last year.

Here are 13 high-beta stocks that are buys. Be sure to also check out these high-beta stocks to avoid. Note: Year-to-date return percentages are based on Feb. 27, 2015, closing prices.


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13. Maximus (MMS - Get Report)
Industry: Technology/Data Processing & Outsourced Services
Market Cap: $3.9 billion
Beta: 1.02
YTD Return: 8%

Maximus provides business process services to government health and human services agencies in the U.S., Australia, Canada, the United Kingdom and Saudi Arabia. The company operates through two segments, health services and human services.

According to TheStreet Rating team, "We rate Maximus (MMS) a bUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, impressive record of earnings per share growth, compelling growth in net income, good cash flow from operations and solid stock price performance. We feel these strengths outweigh the fact that the company shows low profit margins."

Highlights from the analysis by TheStreet Ratings team include:

  • The revenue growth greatly exceeded the industry average of 20.7%. Since the same quarter one year prior, revenues rose by 14.9%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Maximus has improved earnings per share by 28.6% in the most recent quarter compared to the same quarter a year ago. 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, MAXIMUS INC increased its bottom line by earning $2.10 versus $1.68 in the prior year. This year, the market expects an improvement in earnings ($2.35 versus $2.10).
  • 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 IT Services industry average. The net income increased by 23.6% when compared to the same quarter one year prior, going from $33.86 million to $41.86 million.
  • Net operating cash flow has increased to $56.59 million or 34.92% when compared to the same quarter last year. In addition, Maximus has also vastly surpassed the industry average cash flow growth rate of -71.36%.
  • Powered by its strong earnings growth of 28.57% and other important driving factors, this stock has surged by 27.77% over the past year, outperforming the rise in the S&P 500 Index during the same period. We feel that the stock's sharp appreciation over the last year has driven it to a price level which is now somewhat expensive compared to the rest of its industry. The other strengths this company shows, however, justify the higher price levels.

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12. Pebblebrook Hotel Trust (PEB - Get Report)
Market Cap: $3.9 billion
Industry: Financial Services
Beta: 1.04
YTD Return: 6.5%

Pebblebrook Hotel Trust, through Pebblebrook Hotel L.P., operates as a real estate investment trust. The company acquires and invests primarily in hotel properties located in the U.S.

According to TheStreet Rating team, "We rate Pebblebrook Hotel Trust (PEB) a bUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its robust revenue growth, impressive record of earnings per share growth, compelling growth in net income, good cash flow from operations and solid stock price performance. We feel these strengths outweigh the fact that the company shows low profit margins."

Highlights from the analysis by TheStreet Ratings team include:

  • The revenue growth came in higher than the industry average of 0.3%. Since the same quarter one year prior, revenues rose by 29.5%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Pebblebrook Hotel Trust reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. 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, Pebblebrook Hotel Trust increased its bottom line by earning 32 cents versus 13 cents in the prior year. This year, the market expects an improvement in earnings ($1.19 versus 32 cents).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Real Estate Investment Trusts (REITs) industry. The net income increased by 73.2% when compared to the same quarter one year prior, rising from $17.42 million to $30.17 million.
  • Net operating cash flow has significantly increased by 59.63% to $59.81 million when compared to the same quarter last year. In addition, Pebblebrook Hotel Trust has also vastly surpassed the industry average cash flow growth rate of -71.43%.
  • Powered by its strong earnings growth of 100.00% and other important driving factors, this stock has surged by 53.51% over the past year, outperforming the rise in the S&P 500 Index during the same period. 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.

You can view the full analysis from the report here: PEB Ratings Report

 

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11. J2 Global Inc. (JCOM - Get Report)
Industry: Technology/Internet Software & Services
Market Cap: $3.2 billion
Beta: 1.13
YTD Return: 8.5%

J2 Global provides Internet services to businesses and individuals worldwide. The company operates in two segments: business cloud services and digital media.

According to TheStreet Rating team, "We rate J2 Global (JCOM) a buy. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its robust revenue growth, solid stock price performance, growth in earnings per share, compelling growth in net income and reasonable valuation levels. We feel these strengths outweigh the fact that the company shows weak operating cash flow."

Highlights from the analysis by TheStreet Ratings team include:

  • JCOM's revenue growth has slightly outpaced the industry average of 18.6%. Since the same quarter one year prior, revenues rose by 21.1%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Powered by its strong earnings growth of 50.00% and other important driving factors, this stock has surged by 35.94% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, although almost any stock can fall in a broad market decline, JCOM should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • J2 Global reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. During the past fiscal year, J2 Global increased its bottom line by earning $2.59 versus $2.29 in the prior year. This year, the market expects an improvement in earnings ($3.85 versus $2.59).
  • The company, on the basis of net income growth from the same quarter one year ago, has significantly outperformed against the S&P 500 and exceeded that of the Internet Software & Services industry average. The net income increased by 57.8% when compared to the same quarter one year prior, rising from $20.75 million to $32.75 million.

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10. Chesapeake Lodging Trust (CHSP - Get Report)
Industry: Financial Services
Market Cap: $2.1 billion
Beta: 1.16
YTD Return: -4.4%

Chesapeake Lodging Trust is a self-advised real estate investment trust organized in the state of Maryland in June 2009. The company focuses on investments primarily in upper-upscale hotels in major business and convention markets and premium select-service hotels in urban settings or unique locations in the U.S.

According to TheStreet Rating team, "We rate Chesapeake Lodging Trust (CHSP) a buy. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance, impressive record of earnings per share growth, compelling growth in net income and reasonable valuation levels. We feel these strengths outweigh the fact that the company shows low profit margins."

Highlights from the analysis by TheStreet Ratings team include:

  • CHSP's revenue growth has slightly outpaced the industry average of 0.3%. Since the same quarter one year prior, revenues slightly increased by 6.9%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Powered by its strong earnings growth of 48.57% and other important driving factors, this stock has surged by 39.80% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, although almost any stock can fall in a broad market decline, CHSP should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • Chesapeake Lodging Trust has improved earnings per share by 48.6% in the most recent quarter compared to the same quarter a year ago. 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, Chesapeake Lodging Trust increased its bottom line by earning 72 cents versus 65 cents in the prior year. This year, the market expects an improvement in earnings ($1.32 versus 72 cents).
  • The company, on the basis of net income growth from the same quarter one year ago, has significantly outperformed against the S&P 500 and exceeded that of the Real Estate Investment Trusts (REITs) industry average. The net income increased by 49.1% when compared to the same quarter one year prior, rising from $19.24 million to $28.69 million.

 

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9. United Bankshares (UBSI - Get Report)
Market Cap: $2.5 billion
Industry: Financial Services/Regional Banks
Beta: 1.17
YTD Return: flat

United Bankshares, through its subsidiaries, provides commercial and retail banking services and products in the U.S.

According to TheStreet Rating team, "We rate United Bankshares (UBSI) a buy. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its robust revenue growth, expanding profit margins, growth in earnings per share, compelling growth in net income and solid stock price performance. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity."

Highlights from the analysis by TheStreet Ratings team include:

  • The revenue growth greatly exceeded the industry average of 4.1%. Since the same quarter one year prior, revenues rose by 46.2%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • United Bankshares has improved earnings per share by 23.1% in the most recent quarter compared to the same quarter a year ago. 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, United Bankshares increased its bottom line by earning $1.92 versus $1.70 in the prior year. This year, the market expects an improvement in earnings ($2.01 versus $1.92).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Commercial Banks industry. The net income increased by 69.2% when compared to the same quarter one year prior, rising from $19.66 million to $33.26 million.
  • The gross profit margin for United Bankshares is currently very high, coming in at 86.67%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 25.36% is above that of the industry average.
  • 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 28.03% over the past year, a rise that has exceeded that of the S&P 500 Index. We feel that the stock's sharp appreciation over the last year has driven it to a price level which is now somewhat expensive compared to the rest of its industry. The other strengths this company shows, however, justify the higher price levels.

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8. Meredith Corp.  (MDP - Get Report)
Industry: Consumer Goods & Services/Publishing
Market Cap: $2.4 billion
Beta: 1.20
YTD Return: -1.3%

Meredith operates as a diversified media company that focuses primarily on the home and family marketplace in the U.S. It operates in two segments: local media and national media.

According to TheStreet Rating team, "We rate Meredith (MDP) a buy. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance, reasonable valuation levels, expanding profit margins and growth in earnings per share. We feel these strengths outweigh the fact that the company shows weak operating cash flow."

Highlights from the analysis by TheStreet Ratings team include:

  • MDP's revenue growth has slightly outpaced the industry average of 7.3%. Since the same quarter one year prior, revenues rose by 12.7%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Powered by its strong earnings growth of 29.85% and other important driving factors, this stock has surged by 26.01% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, although almost any stock can fall in a broad market decline, MDP should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • The gross profit margin for Meredith is rather high; currently it is at 64.83%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 9.92% trails the industry average.
  • Meredith has improved earnings per share by 29.9% 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, Meredith reported lower earnings of $2.50 versus $2.74 in the prior year. This year, the market expects an improvement in earnings ($3.30 versus $2.50).

 

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7. SS&C Technologies Holdings
( SSNC - Get Report)
Market Cap: $5.3 billion
Industry: Technology/Application Software
Beta: 1.23
YTD Return: 3.7%

SS&C Technologies Holdings provides software products and software-enabled services to the financial services industry, primarily in North America.

According to TheStreet Rating team, "We rate SS&C Technologies Holdings (SSNC) a buy. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance, growth in earnings per share, increase in net income and good cash flow from operations. Although the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results."

Highlights from the analysis by TheStreet Ratings team include:

  • SSNC's revenue growth has slightly outpaced the industry average of 8.0%. Since the same quarter one year prior, revenues slightly increased by 10.0%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Powered by its strong earnings growth of 35.48% and other important driving factors, this stock has surged by 60.53% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, although almost any stock can fall in a broad market decline, SSNC should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • SS&C Technologies Holdings has improved earnings per share by 35.5% in the most recent quarter compared to the same quarter a year ago. 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, SS&C Technologies Holdings increased its bottom line by earning $1.50 versus $1.39 in the prior year. This year, the market expects an improvement in earnings ($2.63 versus $1.50).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Software industry. The net income increased by 36.2% when compared to the same quarter one year prior, rising from $26.88 million to $36.61 million.
  • Net operating cash flow has significantly increased by 63.42% to $88.24 million when compared to the same quarter last year. In addition, SS&C Technologies Holdings has also vastly surpassed the industry average cash flow growth rate of -3.39%.

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6. A.O Smith  (AOS - Get Report)
Industry: Industrials/Building Products
Market Cap: $4.8 billion
Beta: 1.24
YTD Return: 11.7%

A.O. Smith manufactures and sells water heaters and boilers to the residential and commercial end markets primarily in the U.S. Canada, China, Europe, India and the Middle East. It operates in two segments: North America and Rest of World.

According to TheStreet Rating team, "We rate A.O. Smith (AOS) a buy. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. 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, solid stock price performance, impressive record of earnings per share growth and compelling growth in net income. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook."

Highlights from the analysis by TheStreet Ratings team include:

  • AOS's revenue growth has slightly outpaced the industry average of 2.4%. Since the same quarter one year prior, revenues rose by 12.1%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • AOS's debt-to-equity ratio is very low at 0.16 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, AOS has a quick ratio of 1.68, which demonstrates the ability of the company to cover short-term liquidity needs.
  • Powered by its strong earnings growth of 28.26% and other important driving factors, this stock has surged by 29.29% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, although almost any stock can fall in a broad market decline, AOS should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • A.O. Smith has improved earnings per share by 28.3% in the most recent quarter compared to the same quarter a year ago. 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, A.O. Smith increased its bottom line by earning $2.29 versus $1.83 in the prior year. This year, the market expects an improvement in earnings ($2.77 versus $2.29).
  • 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 Building Products industry average. The net income increased by 25.5% when compared to the same quarter one year prior, rising from $42.40 million to $53.20 million.

 

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5. Aaon  (AAON - Get Report)
Industry: Industrials/Building Products
Market Cap: $1.3 billion
Beta: 1.33
YTD Return: 0.5%

Aaon, together with its subsidiaries, manufactures and sells air-conditioning and heating equipment in the U.S. and Canada.

According to TheStreet Rating team, "We rate Aaon (AAON) a buy. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. 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, solid stock price performance, growth in earnings per share and increase in net income. Although the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results."

Highlights from the analysis by TheStreet Ratings team include:

  • The revenue growth came in higher than the industry average of 2.4%. Since the same quarter one year prior, revenues rose by 14.7%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • AAON has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. To add to this, AAON has a quick ratio of 1.81, which demonstrates the ability of the company to cover short-term liquidity needs.
  • The stock has not only risen over the past year, it has done so at a faster pace than the S&P 500, reflecting the earnings growth and other positive factors similar to those we have cited here. 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.
  • Aaon has improved earnings per share by 17.8% in the most recent quarter compared to the same quarter a year ago. 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, Aaon increased its bottom line by earning $0.68 versus $0.49 in the prior year. This year, the market expects an improvement in earnings ($0.80 versus $0.68).
  • 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 Building Products industry average. The net income increased by 18.2% when compared to the same quarter one year prior, going from $10.52 million to $12.44 million.
  • You can view the full analysis from the report here: AAON Ratings Report

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4. Apogee Enterprises (APOG - Get Report)
Industry: Industrials/Building Products
Market Cap: $1.3 billion
Beta: 1.57
YTD Return: 8.2%

Apogee Enterprises, together with its subsidiaries, designs and develops glass solutions for enclosing commercial buildings and framing art primarily in the U.S., Canada, and Brazil.

According to TheStreet Rating team, "We rate Apogee Enterprises (APOG) a buy. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures, solid stock price performance, impressive record of earnings per share growth and compelling growth in net income. We feel these strengths outweigh the fact that the company shows weak operating cash flow."

Highlights from the analysis by TheStreet Ratings team include:

  • The revenue growth came in higher than the industry average of 2.4%. Since the same quarter one year prior, revenues rose by 22.6%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • APOG's debt-to-equity ratio is very low at 0.06 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.46, which illustrates the ability to avoid short-term cash problems.
  • Powered by its strong earnings growth of 42.42% and other important driving factors, this stock has surged by 35.82% over the past year, outperforming the rise in the S&P 500 Index during the same period. Turning to the future, naturally, any stock can fall in a major bear market. However, in almost any other environment, the stock should continue to move higher despite the fact that it has already enjoyed nice gains in the past year.
  • Apogee Enterprises has improved earnings per share by 42.4% in the most recent quarter compared to the same quarter a year ago. 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, Apogee Enterprises increased its bottom line by earning 95 cents versus 67 cents in the prior year. This year, the market expects an improvement in earnings ($1.68 versus 95 cents).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Building Products industry. The net income increased by 42.1% when compared to the same quarter one year prior, rising from $9.67 million to $13.74 million.

 

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3. Deluxe  (DLX - Get Report)
Industry: Industrials/Commercial Printing
Market Cap: $3.3 billion
Beta: 1.58
YTD Return: 6.9%

Deluxe, together with its subsidiaries, provides customized checks and forms, Web site development and hosting, search engine marketing and optimization, and logo design services to small businesses and financial institutions.

According to TheStreet Rating team, "We rate Deluxe (DLX) a Buy. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. 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, solid stock price performance, growth in earnings per share and expanding profit margins. We feel these strengths outweigh the fact that the company shows weak operating cash flow."

Highlights from the analysis by TheStreet Ratings team include:

  • DLX's revenue growth has slightly outpaced the industry average of 3.1%. Since the same quarter one year prior, revenues slightly increased by 7.3%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The debt-to-equity ratio is somewhat low, currently at 0.86, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels.
  • Powered by its strong earnings growth of 28.88% and other important driving factors, this stock has surged by 42.03% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, although almost any stock can fall in a broad market decline, DLX should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • Deluxe has improved earnings per share by 28.9% in the most recent quarter compared to the same quarter a year ago. 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, Deluxe increased its bottom line by earning $3.96 versus $3.65 in the prior year. This year, the market expects an improvement in earnings ($4.45 versus $3.96).
  • The gross profit margin for Deluxe is rather high; currently it is at 67.13%. Regardless of DLX's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, DLX's net profit margin of 12.93% compares favorably to the industry average.

 

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2. G&K Services (GK)
Industry: Industrials/Diversified Support Services
Market Cap: $1.4 billion
Beta: 1.73
YTD Return: 1.6%

G&K Services provides branded uniform and facility services programs in the U.S., Canada and the Dominican Republic.

According to TheStreet Rating team, "We rate G&K Services (GK) a buy. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance, good cash flow from operations, growth in earnings per share and largely solid financial position with reasonable debt levels by most measures. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook."

Highlights from the analysis by TheStreet Ratings team include:

  • GK's revenue growth has slightly outpaced the industry average of 3.1%. Since the same quarter one year prior, revenues slightly increased by 5%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • The stock has not only risen over the past year, it has done so at a faster pace than the S&P 500, reflecting the earnings growth and other positive factors similar to those we have cited here. 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.
  • Net operating cash flow has significantly increased by 85.14% to $26.23 million when compared to the same quarter last year. In addition, G&K Services has also vastly surpassed the industry average cash flow growth rate of -5.12%.
  • G&K SERVICES 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, G&K Services increased its bottom line by earning $2.78 versus $2.58 in the prior year. This year, the market expects an improvement in earnings ($3.28 versus $2.78).
  • The debt-to-equity ratio is somewhat low, currently at 0.62, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.76 is somewhat weak and could be cause for future problems.

 

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1. Pacwest Bancorp (PACW - Get Report)
Market Cap: $4.7 billion
Industry: Financial Services/Regional Banks
Beta: 1.96
YTD Return: 0.82%

PacWest Bancorp operates as the holding company for Pacific Western Bank that provides commercial banking products and services to individuals, professionals, and small to mid-sized businesses in the U.S. It accepts demand, money market and time deposits.

According to TheStreet Rating team, "We rate PacWest Bancorp (PACW) a buy. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its robust revenue growth, impressive record of earnings per share growth, compelling growth in net income, solid stock price performance and expanding profit margins. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity."

Highlights from the analysis by TheStreet Ratings team include:

  • PACW's very impressive revenue growth greatly exceeded the industry average of 4.1%. Since the same quarter one year prior, revenues leaped by 178.2%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • PacWest Bancorp reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. 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, PacWest Bancorp increased its bottom line by earning $1.97 versus $1.08 in the prior year. This year, the market expects an improvement in earnings ($2.85 versus $1.97).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Commercial Banks industry. The net income increased by 2183.7% when compared to the same quarter one year prior, rising from $3.11 million to $71.00 million.
  • Compared to where it was a year ago today, the stock is now trading at a higher level, reflecting both the market's overall trend during that period and the fact that the company's earnings growth has been robust. Looking ahead, the stock's 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 the other strengths this company displays justify these higher price levels.
  • The gross profit margin for PacWest Bancorp is currently very high, coming in at 92.46%. Regardless of PACW's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, PACW's net profit margin of 31.92% compares favorably to the industry average.