Jelly Roll Capital Equity Research

Market Analysis, Education, and Wall Street-Quality Stock Reports

Top Stocks of the Month: May

About once every month I rerun a data model that does a quantitative evaluation of about 1,600 stocks. The model gathers the names, prices, and latest financials, does some calculations, and then generates a power ranking from (for this update) stock #1 to stock #1681. While not perfect, this model is very useful for generating leads into some excellent and potentially under-priced businesses. The 25 stocks are:

1. FreightCar America (ticker: RAIL)

2. Aspreva Pharmaceuticals (ASPV)

3. Avatar Holdings (AVTR)

4. Interdigital Communications (IDCC)

5. NVR

6. Vaalco Energy (EGY)

7. Freeport McMoRan (FCX)

8. Loews Carolina Group (CG)

9. Nucor (NUE)

10. AMREP (AXR)

11. Patterson-UTI (PTEN)

12. Grey Wolf (GW)

13. ExxonMobil (XOM)

14. American Eagle (AEO)

15. ExpressJet (XJT)

16. Global Industries (GLBL)

17. US Physical Therapy (USPH)

18. Occidental Petroleum (OXY)

19. CPI Corp. (CPY)

20. Accenture (ACN)

21. United Online (UNTD)

22. RELM Wireless (RWC)

23. Lamson Sessions (LMS)

24. Marathon Oil (MRO)

25. Tesoro (TSO) and Advance America (AEA) - a tie.

We also break the list down a bit further with the top five micro- and small-caps, as well as the top five mega-caps.

While most of the list remains the same as in April - especially at the top - some new arrivals have also appeared. Accenture (ACN) is a personal favorite that I stumbled upon at $28. The company, which provides consulting and outsourcing services, has been on an absolute tear and the stock has followed. The last two quarters, Accenture has beat EPS estimates by an average of 10%, yet for the quarter ending in May, Thomson Financial shows no upward movement in estimates. I think Accenture has an excellent chance of beating again, and a very real chance the stock goes to $45 or higher as it still looks extremely cheap at 9x free cash flow and 7.2x EBITDA for a double-digit grower.

Lamson Sessions (LMS), which makes various electronic products, also looks like a cheap pre-earnings play at under 6x EBITDA; there is much pessimism about the next few months but I think perceptions are a bit too low for this company.