Interested in consumer companies? Looking for dividends you can rely on? In search of companies that can manage their debt well? 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? If so, here are some interesting ideas for you.
The debt/equity ratio illustrates how aggressively a company is financing its growth via debt. The more debt financing that is used in a capital structure, the more volatile earnings can become due to the additional interest expense. Should a company's potentially enhanced earnings fail to exceed the cost associated with debt financing over time, this can lead the company toward substantial trouble.
The current ratio is a liquidity ratio used to determine a company's financial health. This 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).
We first looked for consumer dividend stocks. We next screened for businesses that have maintained a sound capital structure (D/E ratio < 0.3). We next screened for businesses with a large amount of cash on hand (current ratio > 2)(quick ratio > 2). We did not screen out any market caps.
Do you think these stocks are worth more than the market currently says? Use our list along with your own analysis.
1. Cal-Maine Foods (CALM)
|Industry:||Food - Major Diversified|
Cal-Maine Foods has a dividend yield of 2.30%, a debt/equity ratio of 0.17, a current ratio of 3.11, and a quick ratio of 2.22. The short interest was 17.66% as of May 3, 2012. Cal-Maine Foods engages in the production, grading, packaging, distribution, and marketing of shell eggs. It also produces and markets specialty shell eggs, including nutritionally enhanced, cage free, and organic eggs under the Egg-Land's Best, Farmhouse, and 4-Grain brand names, as well as offers private label specialty shell eggs. The company markets its shell eggs through its distribution network to various customers comprising national and regional grocery store chains, club stores, foodservice distributors, and egg product manufacturers.
2. Chicago Rivet & Machine (CVR)
|Industry:||Auto Manufacturers - Major|
Chicago Rivet & Machine has a dividend yield of 3.23%, a debt/equity ratio of 0.00, a current ratio of 8.71, and a quick ratio of 6.03. The short interest was 0.39% as of May 3, 2012. Chicago Rivet & Machine operates in the fastener industry in North America. It operates in two segments, Fasteners and Assembly Equipment. The Fasteners segment engages in the manufacture and sale of rivets, cold-formed fasteners and parts, and screw machine products.
3. Columbia Sportswear (COLM)
|Industry:||Textile - Apparel Clothing|
Columbia Sportswear has a dividend yield of 1.83%, a debt/equity ratio of 0.00, a current ratio of 5.30, and a quick ratio of 3.28. The short interest was 10.86% as of May 3, 2012. Columbia Sportswear, together with its subsidiaries, engages in the design, development, sourcing, marketing, and distribution of outdoor apparel, footwear, accessories, and equipment in the U.S., Latin America, the Asia Pacific, Europe, the Middle East, Africa, and Canada. It provides apparel, accessories, and equipment for men, women, and youth under Columbia and Mountain Hardwear brands used during outdoor activities, such as skiing, snowboarding, hiking, climbing, mountaineering, camping, hunting, fishing, trail running, water sports, and adventure travel. The company also offers footwear products, including lightweight hiking boots, trail running shoes, rugged cold weather boots, sandals, and casual shoes for men and women under Columbia, Sorel, and Montrail brands, as well as for youth under the Columbia and Sorel brands.
4. Buckeye Technologies (BKI)
|Industry:||Paper & Paper Products|
Buckeye Technologies has a dividend yield of 0.99%, a debt/equity ratio of 0.11, a current ratio of 3.89, and a quick ratio of 2.56. The short interest was 2.71% as of May 3, 2012. Buckeye Technologies engages in the manufacture and distribution of cellulose-based specialty products. It operates in two segments, Specialty Fibers and Nonwoven Materials. The Specialty Fibers segment offers chemical cellulose, customized fibers, and fluff pulp derived from wood and cotton cellulose materials using wetlaid technology.
5. The Female Health Co. (FHCO)
The Female Health Co. has a dividend yield of 4.40%, a debt/equity ratio of 0.00, a current ratio of 2.97, and a quick ratio of 2.67. The short interest was 4.89% as of May 3, 2012. The Female Health Co. manufactures, markets, and sells consumer health care products in the U.S. and internationally. It offers the FC2 female condom, which provides dual protection against unintended pregnancy and sexually transmitted diseases, including HIV/AIDS. The Female Health Co. sells its products to public health clinics, as well as to not-for-profit organizations.
6. Coach (COH)
|Industry:||Textile - Apparel Footwear & Accessories|
Coach has a dividend yield of 1.20%, a debt/equity ratio of 0.01, a current ratio of 2.82, and a quick ratio of 2.06. The short interest was 1.23% as of May 3, 2012. Coach designs and markets accessories and gifts for women and men in the U.S. and internationally. It primarily offers handbags, women's and men's bag, accessories, business cases, footwear, wearables, jewelry, sunwear, travel bags, watches, and fragrance products. The company's accessories, include money pieces, wristlets, cosmetic cases, wallets, card cases, time management and electronic accessories, key rings, charms, and women's and men's belts; business cases, such as computer bags, messenger-style bags, and totes; wearables comprise jackets, sweaters, gloves, hats, and scarves; jewelry consisting of bangle bracelets, necklaces, rings, and earrings; and luggage and related accessories, such as travel kits and valet trays.
Company profiles were sourced from Finviz. Financial data was sourced from Yahoo Finance.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.