Do you like stocks that pay dividends? Company liquidity is an important consideration in any stock analysis. Liquidity gives a company the ability to make big acquisitions if it sees investment opportunities, a cushion for future lulls in demand, and most importantly, it keeps a company's doors open. Are these the types of stocks that you're looking for? Do you prefer companies with strong profits? If the answer is 'yes', here are some interesting ideas to get you started.
The Current ratio is a liquidity ratio used to determine a company's financial health. The metric illustrates how easily a firm can pay back its short obligations all at once through current assets. A company that has a current ratio of one or less is generally a liquidity red flag. Now this doesn't mean the company will go bankrupt tomorrow, but it also doesn't bode well for the company, and may indicate that it could have an issue paying back upcoming obligations.
The Net Margin is a profitability metric that illustrates, by percentage, how much of every dollar earned gets turned into a bottom line profit. This is just one of many profitability metrics used by investors and analysts to better understand what the company is being left with at the end of the day. Generally, a firm that can expand its net profit margins over a period of time will see its stock price rise as well due to the trend of increasing profitability. Net Margin = Net Income/Total Revenue
We first looked for Dividend stocks that have a substantial amount of cash on hand (Current Ratio>2) that they could deploy and with strong profitability (Net Margin [TTM] >10%). We did not screen out any sectors or market caps.
Do you think these dividend stocks will go up in valuation? Use our screened list as a starting point for your own analysis.
1) Alliance Holdings GP, L.P. (AHGP)
|Industry:||Nonmetallic Mineral Mining|
Alliance Holdings GP, L.P. has a Dividend yield of 5.97% and Current Ratio of 2.39 and Net Margin of 20.96%. The short interest was 0.36% as of 04/25/2012. Alliance Holdings GP, L.P., through its subsidiaries, produces and markets coal primarily to utilities and industrial users in the United States. It produces a range of steam coal with varying sulfur and heat contents. The company operates nine underground mining complexes in Illinois, Indiana, Kentucky, Maryland, and West Virginia.
2) Advance America, Cash Advance Centers Inc. (AEA)
Advance America, Cash Advance Centers Inc. has a Dividend yield of 2.38% and Current Ratio of 4.67 and Net Margin of 10.80%. The short interest was 5.34% as of 04/25/2012. Advance America, Cash Advance Centers Inc. provides cash advance services primarily in the United States. The company offers cash advance services comprising cash advances and installment loans to middle-income working individuals; check-cashing services; pre-paid debit cards; and money orders and money transfer, and bill payment services as an agent of a licensed third-party money transmitter. As of December 31, 2011, it operated 2,541 centers in 29 states in the United States, 33 centers in the United Kingdom, and 10 centers in Canada, as well as had 13 limited licensees in the United Kingdom.
3) Applied Materials Inc. (AMAT)
|Industry:||Semiconductor Equipment & Materials|
Applied Materials Inc. has a Dividend yield of 3.13% and Current Ratio of 2.47 and Net Margin of 15.35%. The short interest was 1.10% as of 04/25/2012. Applied Materials, Inc. provides manufacturing equipment, services, and software to the semiconductor, flat panel display, solar photovoltaic [PV], and related industries worldwide. The company's Silicon Systems Group segment offers a range of manufacturing equipment used to fabricate semiconductor chips or integrated circuits. This segment provides systems that perform primary processes used in chip fabrication, including atomic layer deposition, chemical vapor deposition, physical vapor deposition, electrochemical deposition, rapid thermal processing, chemical mechanical planarization, wet cleaning, and wafer metrology and inspection, as well as systems that etch or inspect circuit patterns on masks used in the photolithography process.
4) Acorn Energy, Inc. (ACFN)
Acorn Energy, Inc. has a Dividend yield of 1.25% and Current Ratio of 5.99 and Net Margin of 27.47%. The short interest was 1.39% as of 04/25/2012. Acorn Energy, Inc., through its subsidiaries, provides technology driven solutions for energy infrastructure asset management worldwide. It offers sonar and acoustic related solutions for energy, defense, and commercial markets with a focus on underwater site security for strategic energy installations and other acoustic systems, as well as develops and produces real-time embedded hardware and software. The company also develops and markets remote monitoring systems to electric utilities and industrial facilities, which are used in a range of utility applications, including outage management, power quality monitoring, system planning, trouble shooting and proactive maintenance, and condition monitoring; and provides the intelligence to transmission and distribution network operators.
*Company profiles were sourced from Finviz.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.