TheStreet.com
Top 5 Stocks: General Mills, Advanced Auto
Tuesday July 28, 3:03 am ET
ByJake Lynch, TheStreet.com Ratings Investment Analyst

BOSTON (TheStreet) -- The following companies have annual revenue of more than $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.

New Jersey Resources is an energy-services company that provides retail and wholesale energy services to customers in New Jersey and other states from the Gulf Coast to New England and Canada.

The numbers: Fiscal second-quarter revenue declined 20% to $938 million as earnings surged 183% to $36 million, or 83 cents per share. The debt-to-equity ratio is low at 0.6. But a quick ratio of 0.4 indicates a weak cash position. Margins improved significantly during the quarter, with operating margin climbing past 6% and net margin jumping to 4%.

The stock: New Jersey Resources is flat in 2009, underperforming the Dow Jones Industrial Average and S&P 500. The stock trades at a fair price-to-earnings ratio of 14 and offers an attractive 3.2% dividend yield.

Advanced Auto Parts sells aftermarket automotive parts, accessories and maintenance items.

The numbers: First-quarter revenue increased 10% to $1.7 billion as earnings rose 14% to $94 million, or 98 cents. The operating margin remained stable at 9% and the net margin improved from 5% to 6%. Just $51 million of cash reserves and a quick ratio of 0.1 indicate a weak liquidity position. But a debt-to-equity ratio of 0.3 demonstrates modest leverage.

The stock: Advanced Auto Parts has climbed 37% in 2009, beating major U.S. indices. The stock trades at an expensive price-to-earnings ratio of 18 and offers a dividend yield below 1%.

UGI distributes and markets energy products and services in the U.S. and internationally. The company also operates a heating, ventilation, air conditioning and refrigeration business serving customers in the Mid-Atlantic region.

The numbers: Fiscal second-quarter revenue dropped 10% to $2.1 billion as net income increased 25% to $158 million and earnings per share improved 24% to $1.45, marking an eight-quarter growth streak . A quick ratio of 0.9 indicates a less-than-ideal liquidity position and a debt-to-equity ratio of 1.5 reflects sizable leverage. The operating margin improved to 17% and the net margin inched past 7% during the quarter.

The stock: UGI has climbed 8% in 2009, outperforming the Dow and 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% dividend yield.

Village Super Market operates a chain of ShopRite supermarkets in the U.S.

The numbers: Fiscal third-quarter revenue increased 7% to $293 million as net income increased 25% to $6.3 million and earnings per share 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 0.8 and a debt-to-equity ratio of 0.2.

The stock: Village Super Market has climbed 3% in 2009, in line with the Dow. The stock trades at a price-to-earnings ratio of 17 and offers a 3% dividend yield.

General Mills makes 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 per 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 4% in 2009, underperforming the Dow and S&P 500. The stock trades at a fair price-to-earnings ratio of 15 and offers a 3.2% dividend yield. --Reported by Jake Lynch in Boston. Feedback can be sent to jake.lynch@thestreet.com.


Independent market research, commentary, analysis and news. Learn more.



Mail to Friend Email Story
Alerts Set News Alert
Printer
Version  Print Story 

TheStreet.com
·[external] Dell Upgraded, Poised for Sales Growth
·[external] Five ETFs for Times of Turmoil
Independent Analysis & Picks
RealMoney Free Trial