Interested in gaining exposure to utility companies? Do you feel better knowing your favorite companies have enough cash to cover their operating expenses for a very long time? Are you after stocks analysts are calling "buys" or "strong buys"? We ran a screen you might be interested in.
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. 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 it is to meet current obligations using liquid assets).
We first looked for utility stocks. We then looked for companies that have strong liquidity (current ratio > 2)(quick ratio > 2). We then looked for businesses that analysts rate as buys or strong buys (mean recommendation < 3). We did not screen out any market caps.
Do you think these stocks will outperform? Use our list to help with your own analysis.
1. U.S. Geothermal (NYSEMKT:HTM)
U.S. Geothermal has a current ratio of 4.17, a quick ratio of 4.05, and an analyst rating of 2.00. The short interest was 19.69% as of May 10, 2012. U.S. Geothermal engages in the acquisition, development, and utilization of geothermal resources in the Western region of the U.S.
2. EQT Corp. (NYSE:EQT)
EQT Corp. has a current ratio of 2.24, a quick ratio of 2.15, and an analyst rating of 1.90. The short interest was 1.25% as of May 10, 2012. EQT Corp., together with its subsidiaries, operates as an integrated energy company in the U.S. It operates in three segments: EQT Production, EQT Midstream, and Distribution. The EQT Production segment engages in the exploration, development, and production of natural gas, natural gas liquids, and crude oil in the Appalachian Basin.
3. York Water Co. (NASDAQ:YORW)
York Water Co. has a current ratio of 2.16, a quick ratio of 2.02, and an analyst rating of 2.20. The short interest was 2.50% as of May 10, 2012. York Water Co. engages in impounding, purifying, and distributing drinking water in Pennsylvania. It has two reservoirs, Lake Williams and Lake Redman, which together hold up to approximately 2.2 billion gallons of water. The company also has a 15-mile pipeline from the Susquehanna River to Lake Redman that provides access to an additional supply of 12 million gallons of water per day.
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.