Jake Lynch is a ratings investment analyst with TheStreet.com.
The following companies have market capitalizations between $50-million and $500-million and "buy" ratings from our proprietary quantitative model, which considers more than 60 factors. They're ordered by their potential to rise, starting with the stock with most likely to gain.
Monro Muffler Brake repairs cars and sells tires.
The numbers: Fiscal first-quarter net income jumped 21 per cent to $9.4-million, or 46 cents a share, as revenue increased 6 per cent to $128-million. Its operating margin rose from 12 per cent to 13 per cent and its net margin inched past 7 per cent. Monro has a weak cash position, with just $3-million of reserves. A debt-to-equity ratio of 0.5 demonstrates conservative leverage.
The stock: Monro is down 1 per cent this year, underperforming major U.S. indices. The stock trades at a price-to-earnings ratio of 20, a slight premium to the market, and offers a 1.1 per cent dividend yield, less than the average of S&P 500 companies. Monro is benefitting as budget-conscious consumers fix their cars instead of buying new ones.
PetMed Express sells medications and health products for dogs, cats and horses.
The numbers: Fiscal first-quarter net income grew 22 per cent to $8.1-million and earnings per share climbed 29 per cent to 36 cents, helped by a lower share count. Revenue increased 13 per cent to $77-million. Its operating margin increased from 14 per cent to 16 per cent and its net margin topped 10 per cent. A quick ratio of 3.7 indicates outstanding liquidity. The company has no debt.
The stock: PetMed is up 4 per cent this year, underperforming major U.S. indices. The stock trades at a fair price-to-earnings ratio of 17, but the company doesn't consistently pay dividends.
NCI, a technology consulting firm, advises government agencies on issues such as cybersecurity and computer networking.
The numbers: Second-quarter net income rose 26 per cent to $5.1-million, or 37 cents, as revenue advanced 13 per cent to $109-million. Its operating margin rose to 8 per cent and its net margin rose from 4 per cent to 5 per cent. A quick ratio of 1.6 demonstrates NCI's ample liquidity. And a debt-to-equity ratio of 0.2 indicates modest leverage.
The stock: NCI shares are flat this year, underperforming major U.S. indices. The stock trades at an expensive price-to-earnings ratio of 21 and the company doesn't pay dividends. NCI's services will be in demand as the federal government tries to trim spending.
Bio-Reference Laboratories provides testing services in the New York area.
The numbers: Fiscal second-quarter net income grew 35 per cent to $4.6-million, or 33 cents, as revenue increased 16 per cent to $87-million. Its operating margin expanded from 8 per cent to 10 per cent and its net margin topped 5 per cent. The company has an admirable financial position, with $13-million of cash reserves, amounting to a quick ratio of 1.8, and a debt-to-equity ratio of just 0.3.
The stock: Bio-Reference is up 14 per cent this year, outpacing the Dow Jones Industrial Average and the S&P 500 Index. The stock trades at a costly price-to-earnings ratio of 23 and the company doesn't pay dividends.
Atrion makes medical products and surgical tools.
The numbers: Second-quarter net income grew 13 per cent to $4.7-million, or $2.30, as revenue climbed 7 per cent to $26-million. Its operating margin rose from 25 per cent to 27 per cent and its net margin climbed to 18 per cent. Atrion has no debt and $22-million of cash, amounting to a quick ratio of 4.9.
The stock: Atrion has gained 37 per cent this year, outpacing major U.S. indices. The stock trades at a fair price-to-earnings ratio of 16 and offers a 1.1 per cent dividend yield, less than the average of S&P 500 companies.