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TSC Ratings TheStreet.com Ratings provides exclusive stock, ETF and mutual fund recommendations using proprietary tools. Our "safety-first" approach aims to reduce risk while achieving performance on a total return basis.
Each business day, we compile a list of the top five stocks in one of five categories -- fast-growth, all-around value, large-cap, mid-cap and small-cap.
Today, all-around value stocks are in the spotlight. These 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.
Village Super Market
The company's fiscal third-quarter revenue increased 7% year over year to $293 million as net income increased 25% to $6.3 million and EPS climbed 24% to 47 cents. Same-store sales, an important gauge of year-over-year 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 .82 and a debt-to-equity ratio of .19. Gross margin fell a marginal 35 basis points during the quarter to 27% as operating margin increased 59 basis points to 3.7% and net margin climbed 33 basis points to 2.1%.
Shares of Village Super Market have climbed 4% in 2009 and are up 14% from their March low. The stock trades at a price to earnings ratio of 17, representing a premium to the market, and offers a 2.9% dividend yield.
Dollar Tree
The company's fiscal first-quarter revenue jumped 14% year over year to $1.2 billion as net income increased 39% to $60 million and EPS increased 28% to 66 cents. The company maintained modest leverage as reflected by its debt-to-equity ratio of 0.21, although a quick ratio of .86 indicates a less-than-ideal liquidity position. Gross margin remained stable at 38% as operating margin ascended 150 basis points to 8.1% and net margin climbed 88 basis points to 5%. Return on assets improved 20 basis points to 12% and return on equity fell 71 basis points to 19%.
Shares of Dollar Tree have climbed 3% year-to-date, slightly outperforming the Dow Jones Industrial Average and the S&P 500. The stock trades at a price-to-earnings ratio around 16, indicating a slight premium to the S&P 500, and does not offer dividends.
New Jersey Resources
The company's second-fiscal-quarter revenue declined 20% to $938 million as net income and EPS surged 183% to $36 million and 83 cents, respectively. The debt-to-equity ratio remained low at 0.63, but a quick ratio of .43 indicates a weak cash position. Margins improved significantly during the quarter, with gross margin rising 442 basis points to 7%, operating margin climbing 443 basis points to 6.2% and net margin jumping 272 basis points to 3.8%. Return on assets increased 292 basis points to 4.9% and return on equity ascended 513 basis points to 15.7%.
Shares of New Jersey Resources have fallen 6% in 2009, underperforming the Dow Jones Industrial Average and S&P 500. The stock trades at a price to earnings ratio of 13, representing a slight discount to the market, and offers an attractive 3.4% dividend yield.
UGI
The company's second-fiscal-quarter revenue dropped 9.5% to $2.1 billion as net income increased 25% to $158 million and EPS improved 24% to $1.45, continuing a trend of positive growth for eight consecutive quarters. A quick ratio of .86 indicates a less-than-ideal liquidity position and a debt-to-equity ratio of 1.46 reflects sizable leverage. Gross margin increased 471 basis points during the quarter to 20% as operating margin climbed 432 basis points to 17% and net margin jumped 207 basis points to 7.4%. Return on assets increased 87 basis points to 4.6% and return on equity increased 400 basis points to 18%.
Shares of UGI have climbed 5% in 2009, outperforming the Dow Jones Industrial Average and the S&P 500. Still, the stock trades at a price to earnings ratio under 10, indicating a significant discount to the market, and offers a 3.14% dividend yield.
Enterprise Products Partners
The company's fiscal first quarter revenue fell 40% to $3.4 billion as net income weakened 13% to $225 million and EPS fell 20% to 41 cents. A quick ratio of .62 and a debt-to-equity ratio of 1.48 indicate a less-than-ideal financial position. However, margins improved significantly during the quarter, with gross margin increasing 672 basis points to 16%, operating margin climbing 429 basis points to 10.5% and net margin jumping 202 basis points to 6.6%. Return on assets improved 103 basis points to 5% and return on equity increased 363 basis points to 15%.
Shares of Enterprise Products have climbed 22% in 2009, outperforming all major indexes. Yet, at its current price, the stock still offers a cash distribution yield of 8.51%. Cash distributions are taxed differently than dividends.
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A rating can be viewed for any stock through our screener stock rating screener. Each rating is derived from a variety of fundamental and pricing figures and represents our opinion of risk-adjusted performance relative to a 5,000+ stock coverage universe. However, the rating does not incorporate all factors that can alter a stock's performance, such as corporate or industry events, technology innovations and shifts in competitive dynamics.
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