4 Mid Cap Companies With Impressive Profitability And Low Leverage

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 |  Includes: CQP, EPB, RNR, XCO
by: Follow My Alpha

While most market pundits in the media continue to overlook mid-cap companies we aren’t. A few have impressive operating profit margins that don't depend on heavy leverage. Now we specifically looked at the operating margin because it illustrates a company’s pricing strategy and operating efficiency. While it won’t tell an investor everything about the company it does provide an idea on how a company is performing in the current market environment.

We ran a screen for mid-cap companies that illustrate strong profitability (1-year fiscal operating margin>15%). From this narrowed pool we then screened for companys that maintained low/moderate leverage (financial leverage<3).

The list is ranked from lowest to highest by the 1-year fiscal operating margin:

1. EXCO Resources, Inc. (NYSE:XCO)

Sector

Energy

Industry

Oil and Gas E&P

Market Cap

$2622 million

Beta

1.8

Analyst Sentiment

8/13-List Hold/Neutral (Neutral)

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The company develops and produces oil and natural gas in North America. XCO’s 1-year fiscal operating margin is 107.95%. The company’s financial leverage is 2.22. The short interest for the company is 6.1% as of 8/15/2011.

2. Cheniere Energy Partners LP (NYSEMKT:CQP)

Sector

Energy

Industry

Oil and Gas Midstream

Market Cap

$2479 million

Beta

0.32

Analyst Sentiment

None

Click to enlarge

The company owns and operates two natural gas terminals in Louisiana. CQP’s 1-year fiscal operating margin is 70.33%. The company’s financial leverage is 2.04. The short interest for the company is 2% as of 8/15/2011.

3. Renaissance Re Holdings, Ltd. (NYSE:RNR)

Sector

Financial Services

Industry

Insurance - Reinsurance

Market Cap

3155 million

Beta

0.41

Analyst Sentiment

8/13-List Hold/Neutral (Neutral)

Click to enlarge

The company provides reinsurance and insurance services worldwide. RNR’s 1-year fiscal operating margin is 64.7%. The company’s financial leverage is 2.75. The short interest for the company is 4% as of 8/15/2011.

4. El Paso Pipeline Partners LP (NYSE:EPB)

Sector

Energy

Industry

Oil and Gas Midstream

Market Cap

$7164 million

Beta

0.2

Analyst Sentiment

12/15-List Buy/Outperform (Bullish)

Click to enlarge

The company owns and operates natural gas pipelines and storage facilities in the United States. The company’s 1-year fiscal operating margin is 55.58%. The company’s financial leverage is 2.26. The short interest for the company is 1% as of 8/15/2011.

We hope this helps investors as they do their own due diligence on mid cap companies that illustrate strong profitability.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.