Interested in industrial companies? Do you prefer stocks that pay back their investors with dividend income? Do you prefer companies with strong profits? We ran a screen you might find helpful.
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 Quick ratio measures a company's ability to use its cash or assets to extinguish its current liabilities immediately. Quick assets include assets that presumably can be converted to cash at close to their book values. A company with a Quick Ratio of less than 1 cannot currently pay back its current liabilities. The quick ratio is more conservative than the Current Ratio because it excludes inventory from current assets, since some companies have difficulty turning their inventory into cash. If short-term obligations need to be paid off immediately, sometimes the current ratio would overestimate a company's short-term financial strength. In general, the higher the ratio, the greater the company's liquidity (i.e., the better able to meet current obligations using liquid assets).
Return on Assets [ROA] illustrates how much a company is generating in earnings from its assets alone. This metric gives investors a picture of how profitable the company is relative to the assets in current possession. As well, it lets investors see how efficient and effective management is at generating earnings from the company's assets. While most management teams can probably make money by throwing money at an issue very few can make very large profits with little investment.
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 industrial dividend stocks. Next, we then screened for businesses that have a substantial amount of cash on hand (Current Ratio>2)(Quick Ratio>2). We then looked for businesses that have strong profitability relative to their asset base (ROA [TTM]>10%)(Net Margin [TTM]>10%). We did not screen out any market caps.
Do you think these stocks are undervalued and have room to trade higher? Use our screened list as a starting point for your own analysis.
Fastenal Company (FAST)
|Industry:||General Building Materials|
Fastenal Company has a Dividend yield of 1.45% and Current Ratio of 5.71; Quick Ratio of 2.97; Return on Assets of 22.68% and Net Margin of 13.08%. The short interest was 6.46% as of 05/01/2012. Fastenal Company, together with its subsidiaries, operates as a wholesaler and retailer of industrial and construction supplies in the United States and internationally. It offers fastener product line under two categories, which include threaded fasteners, such as bolts, nuts, screws, studs, and related washers that are used in manufactured products and building projects, as well as in the maintenance and repair of machines and structures; and miscellaneous supplies and hardware comprising various pins and machinery keys, concrete anchors, metal framing systems, wire ropes, strut products, rivets, and related accessories. The company serves the construction market, which consists of general, electrical, plumbing, sheet metal, and road contractors; and manufacturing market, including original equipment manufacturers, and maintenance and repair operations, as well as other users, such as farmers, truckers, railroads, mining companies, federal, state and local governmental entities, schools, and retail trades.
Graham Corp. (GHM)
Graham Corp. has a Dividend yield of 0.36% and Current Ratio of 3.38; Quick Ratio of 3.12; Return on Assets of 11.36% and Net Margin of 11.76%. The short interest was 4.41% as of 05/01/2012. Graham Corporation, together with its subsidiaries, engages in the design, manufacture, and sale of vacuum and heat transfer equipment worldwide. It offers heat transfer equipment, including surface condensers, water heaters, and various types of heat exchangers comprising helical coil heat exchangers marketed under the Heliflow name, and plate and frame exchangers; and vacuum equipment, such as steam jet ejector vacuum systems and liquid ring vacuum pumps. The company also supplies components and raw materials for the nuclear power generating market; and services and sells spare parts for its equipment. Its products are used in various industrial process applications, including fertilizer plants, petrochemical intermediate plants, coals-to-chemicals plants, gas-to-liquids plants, and ethylene, methanol and, nitrogen producing plants, as well as plastics, resins, and fibers plants; nuclear power generation, fossil fuel plants, biomass plants, co-generation power plants, geothermal power plants, and ethanol plants; propulsion systems for nuclear aircraft carriers and other nuclear powered vessels; soap manufacturing plants, food processing plants, pharmaceutical plants, and liquefied natural gas production facilities.
Graco Inc. (GGG)
Graco Inc. has a Dividend yield of 1.69%; Current Ratio of 4.73; Quick Ratio of 3.91; Return on Assets of 17.77% and Net Margin of 15.41%. The short interest was 1.48% as of 05/01/2012. Graco Inc. designs, manufactures, and markets systems and equipment to pump, meter, mix, and dispense various fluids and semi-solids worldwide. It operates in three segments: Industrial, Contractor, and Lubrication. The Industrial segment provides equipment to apply paint and other coatings to motor vehicles, appliances, furniture, and other industrial and consumer products; and process pump equipment that move and dispense chemicals, and liquid and semi-solid foods.
CLARCOR Inc. (CLC)
CLARCOR Inc. has a Dividend yield of 1.00% and Current Ratio of 4.28; Quick Ratio of 2.76; Return on Assets of 11.51% and Net Margin of 11.06%. The short interest was 2.82% as of 05/01/2012. CLARCOR Inc. provides filtration products, filtration systems and services, and consumer and industrial packaging products worldwide. Its Engine/Mobile Filtration segment offers oil, air, fuel, coolant, transmission, and hydraulic fluid filters for engines used in stationary power generation and for engines in mobile equipment applications, including trucks, automobiles, buses, and locomotives, as well as marine, construction, industrial, mining, and agricultural equipment. The company's Industrial/Environmental Filtration segment manufactures specialty industrial process liquid filters; filters for pharmaceutical processes and beverages; filtration systems, filters, and coalescers for the oil and natural gas industry; filtration systems for aircraft refueling, anti-pollution, sewage treatment, and water recycling; bilge water separators; sand control filters for oil and gas drilling; and woven wire and metallic products for filtration of plastics and polymer fibers.
Littelfuse Inc. (LFUS)
|Industry:||Industrial Electrical Equipment|
Littelfuse Inc. has a Dividend yield of 1.15% and Current Ratio of 2.53; Quick Ratio of 2.03; Return on Assets of 13.39% and Net Margin of 13.09%. The short interest was 3.45% as of 05/01/2012. Littelfuse, Inc. designs, manufactures, and sells circuit protection devices in the Americas, Europe, and the Asia-Pacific. The company's Electronics segment provides circuit protection components, including fuses and protectors, positive temperature coefficient resettable fuses, varistors, polymer electrostatic discharge suppressors, discrete transient voltage suppression diodes, TVS diode arrays and protection thyristors, gas discharge tubes, and power switching components, as well as fuse holders, blocks, and related accessories used in mobile phones, flat-screen TVs, computers, telecommunications equipment, modems, data transmission lines, and alarm systems. This segment sells its products under the PICO II, NANO2 SMF, PulseGuard, TECCOR, SIDACtor, Battrax, and SPA brand names.
Nordson Corporation (NDSN)
Nordson Corporation has a Dividend yield of 0.93% and Current Ratio of 2.92; Quick Ratio of 2.01; Return on Assets of 18.69% and Net Margin of 17.35%. The short interest was 1.22% as of 05/01/2012. Nordson Corporation engineers, manufactures, and markets products and systems for precision dispensing, testing and inspection, fluid management, surface treatment, and curing. Its Adhesive Dispensing Systems segment provides equipment to apply adhesives, lotions, liquids, and fibers to disposable products; automated adhesive dispensing systems for food and beverage, and packaged goods industries; adhesive and sealant dispensing systems for paper and paperboard converting industries, and to bond and seal plastics, metal, and wood products; and laminating and coating systems to manufacture continuous-roll goods in nonwovens, textile, paper, and flexible packaging industries. The company's Advanced Technology Systems segment offers automated gas plasma treatment systems to clean and condition surfaces for semiconductor, medical, and printed circuit board industries; controlled manual and automated systems to apply materials in customer processes requiring precision and material conservation; fluid connection components for medical and industrial flow control applications; and bond testing and automated optical and x-ray inspection systems for semiconductor and printed circuit board industries.
*Company profiles were sourced from Finviz. Financial data was sourced from Finviz and Google Finance.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.