Do you like stocks with high dividend yield? Do you prefer companies with high liquidity? Looking for ways to dig deeper into a company's profitability? We ran a screen you could find useful.
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).
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
Return on Equity [ROE] is one way to identify great potential names relative to profitability. This ratio illustrates the percentage return on shareholder equity. As well, this metric segments the company into operational efficiency, asset use efficiency, and financial leverage. Why does this matter? Simply put, it allows investors to get a real picture of how the company is generating these returns and helps identify parts of the company that may be underperforming.
We first looked for stocks that have a high dividend yield (Div. Yield > 5%). We then looked for companies with a large amount of cash on hand (Current Ratio>2)(Quick Ratio>2). We then looked for companies with strong profitability (Net Margin [TTM] >10%)(ROE [TTM]>30%). We did not screen out any market caps or sectors.
Do you think these stocks failed to price their value accurately? Use our list to help with your own analysis.
1) Southern Copper Corp. (SCCO)
| Sector: | Basic Materials |
| Industry: | Copper |
| Market Cap: | $28.29B |
| Beta: | 1.58 |
Southern Copper Corp. has a Dividend Yield of 6.08% and Current Ratio of 3.12 and Quick Ratio of 2.47 and Net Margin of 34.38% and Return on Equity of 59.11%. The short interest was 5.31% as of 05/03/2012. Southern Copper Corporation engages in mining, exploring, producing, smelting, and refining copper and other minerals in Peru, Mexico, and Chile. It is involved in the mining, milling, and flotation of copper ore to produce copper and molybdenum concentrates; smelting of copper concentrates to produce anode copper; and refining of anode copper to produce copper cathodes, as well as refined silver. The company operates Toquepala and Cuajone mines in the Andes Mountains located to the southeast of the city of Lima, Peru, as well as a smelter and refinery in the coastal city of Ilo, Peru. It also operates La Caridad and Buenavista copper mines, and smelting and refining plants in Mexico.
2) Alliance Holdings GP, L.P. (AHGP)
| Sector: | Basic Materials |
| Industry: | Nonmetallic Mineral Mining |
| Market Cap: | $2.68B |
| Beta: | 0.74 |
Alliance Holdings GP, L.P. has a Dividend Yield of 5.70% and Current Ratio of 2.39 and Quick Ratio of 2.22 and Net Margin of 20.96% and Return on Equity of 59.58%. The short interest was 0.73% as of 05/03/2012. 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.
3) Terra Nitrogen Company, L.P. (TNH)
| Sector: | Basic Materials |
| Industry: | Agricultural Chemicals |
| Market Cap: | $4.86B |
| Beta: | 0.73 |
Terra Nitrogen Company, L.P. has a Dividend Yield of 6.50% and Current Ratio of 6.94 and Quick Ratio of 6.22 and Net Margin of 63.59% and Return on Equity of 127.46%. The short interest was 1.63% as of 05/03/2012. Terra Nitrogen Company, L.P. engages in the production and sale of nitrogen fertilizer products. It primarily offers anhydrous ammonia and urea ammonium nitrate solutions. Terra Nitrogen GP Inc.
4) CVR Partners, LP (UAN)
| Sector: | Basic Materials |
| Industry: | Agricultural Chemicals |
| Market Cap: | $2.11B |
| Beta: | - |
CVR Partners, LP has a Dividend Yield of 7.24% and Current Ratio of 6.40 and Quick Ratio of 5.86 and Net Margin of 43.73% and Return on Equity of 53.65%. The short interest was 1.79% as of 05/03/2012. CVR Partners, LP engages in the production, distribution, and marketing of nitrogen fertilizers in North America. Its nitrogen fertilizer products include ammonia and urea ammonium nitrate. The company was founded in 2007 and is based in Sugar Land, Texas.
5) Alliance Resource Partners LP (ARLP)
| Sector: | Basic Materials |
| Industry: | Industrial Metals & Minerals |
| Market Cap: | $2.34B |
| Beta: | 0.79 |
Alliance Resource Partners LP has a Dividend Yield of 6.23% and Current Ratio of 2.38 and Quick Ratio of 2.21 and Net Margin of 21.12% and Return on Equity of 36.30%. The short interest was 0.56% as of 05/03/2012. Alliance Resource Partners, L.P. engages in the production and marketing of coal primarily to utilities and industrial users in the United States.
*Company profiles were sourced from Finviz. Financial data was sourced from Finviz.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
