This screen looks for companies that have a quick ratio of greater than 5 (they have enough short term assets to cover their short term liabilities at least five times over); their price earnings ratio is greater than five (they are profitable); they have had some recent positive insider transactions (showing management is bullish); their market capitalization is at least $300 million (filtering out micro cap stocks that can be too easily price manipulated); and their price is at least $5 (the minimum threshold for many institutional investors to trade the equity). The screen was run on finviz.com and the supplemental data was drawn from finance.yahoo.com.
These companies have established a strong cash and short term investment position with little or no long term debt. So while the businesses may shift from cycle to cycle, their cash management should help them through the down periods. These companies are not ones you hear about in the headlines every day, but with careful trading, sometimes being off the beaten path can be more profitable. If you do decide to open positions in any of these equities, be sure to set stops to protect your equity.
Take a closer look at these companies, what do you think their stock price will do next ?
Acme Packet (APKT) is in the Technology Communication Equipment sub-sector [competitors are Cisco (CSCO) and Juniper Networks (JNPR)] with a $1.34B market cap and a quick ratio of 8.5 and no long term debt. While profitable, the 284.86 p/e ratio is enough to encourage a closer look. Recent prices action was around $20. For those who like to use option strategies with their stocks, APKT offers weekly, monthly and LEAP options. Despite have a strong cash, short term investment and almost no long term debt, APKT does not pay a dividend. It has $5.39 per share cash on hand.
Comtech Telecommunications Corp. (CMTL) is also in the Technology Communication Equipment sub-sector [competitors include Qualcomm (QCOM) and ViaSat (VSAT)] with a much smaller market cap of $419.62M and a quick ratio of 5.4. Recent price action was around $24, with a sharp drop last week after the earnings announcement which disappointed the street. CMTLs p/e ratio is a more comfortable 17.24 but still worth closer examination. CMTL has a 4.6% dividend yield with a whopping $21.53 cash per share on hand - 89% of the per share price! So why is Wall Street valuing this company at just a shade above cash on hand ?
Dolby Laboratories (DLB) is in the Technology - Diversified Electronics sub-industry [competitors include DTS (DTSI) and a host of privately held companies] with a $3.47B market cap and a quick ratio of 6.1 with no long term debt. DLB has a solid 13.81 p/e ratio. Recent price action was around $33.83. DLB does not pay a dividend but has $7.76 cash per share on hand. The open short interest is 14% so the bears are running this one - be careful.
Gentex Corp. (GNTX) is in the Consumer Goods- Auto Parts sub-sector [competitors are privately held] with a market cap of $2.57B and a quick ratio of 2.5 with no long term debt. GNTX has a p/e ratio of 15.37 and recent price action was $17.98. 2.9% dividend and $2.82 per share cash on hand.
Tejon Ranch Co. (TRC) is in the Financial-Property Management sub-sector [competitors include a number of private firms and Dole Foods (DOLE)] with a market cap of $542.56M and a 3.25 quick ratio. TRC has a few immediate cautions - the current p/e of 56.29 and the daily average trading volume is less than 50,000 shares which makes getting in and out at the prices you might target tricky. Recent price action was around $27. TRC does not may a dividend and has $3.74 of cash on hand.
Volcano Corporation (VOLC) is positioned in the Healthcare - Medical Appliances & Equipment sub-sector [competitors include Boston Scientific (BSX) and St. Jude Medical (STJ)] with a market cap of $1.34B and a quick ratio of 5.1. VOLC has a fairly high p/e of 38.87. Recent price action was just be $25. VOLC does not pay a dividend and has $4.49 cash per share on hand.
Xilinx Inc. (XLNX) is in the Technology - Semiconductor - Integrated Circuits sub-sector [competitors include Altera (ALTR) and Lattice Semiconductors (LSCC)] with a market cap of $9.10B and a 5.9 quick ratio. XLNX has a 18.84 p/e and recent price action was just below $34. XLNX pays a 2.3% dividend and has $6.54 in cash per share on hand.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.I am not a registered investment advisor and do not provide specific investment advice. The information contained herein is only my opinion based on personal research and offered for informational purposes. Nothing in this article should be taken as a solicitation to purchase or sell securities. Before buying or selling any equity, do your own research and reach your own conclusion. Investing includes risks, including loss of principal.