In his small cap growth oriented newsletter, Upside, editor Richard Moroney uses a ranking system known as Quadrix that assesses a stock based on a wide variety of fundamental, financial and technical factors.
A rarity in this system, Chaparral Steel (NASDAQ: CHAP) earns a 100 out of 100 rating. Chaparral, he notes, is the second-largest supplier of structural steel in North America.
The firm specializes in structural beams and steel bars, which are used for commercial construction. Its two minimill plants, he notes, use recycled steel that comes primarily from shredded automobiles.
Looking ahead, he says, "the company should benefit from robust demand, decent pricing, and strict cost controls." In addition, he notes that last November the company paid its first quarterly dividend, initially set at $0.10 per share.
Further, he observes, management has authorized a share-repurchase program of to $100 million. Earnings estimates for this year and next have trended higher and for fiscal 2007 ending May, he notes that consensus estimates project per-share profits will be up 50% to $4.99.
He concludes, "With the maximum overall Quadrix score of 100, Chaparral is being added to our coverage as a Buy."
For more stock picks from the leading financial newsletter advisors, visit Steven Halpern's free daily website, TheStockAdvisors.com.
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