Do you prefer the largest and established stocks? Do you prefer companies with strong profits? 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? We ran a screen you might find helpful.
The Operating Profit Margin is a profitability ratio that measures the effectiveness of the company's operating efficiency. This metric allows investors to see how much profit is left after all variable costs are covered. If the company's margin is increasing over time this means that it's earning more per dollar of sales. Finding trends in the Operating Profit Margin helps investors identify companies that are improving profitability over time and managing the economic landscape better than competitors.
EPS growth (earnings per share growth) illustrates the growth of earnings per share over time. EPS growth rates help investors identify stocks that are increasing or decreasing in profitability. This profitability metric is generally a key driver in the price of the stock as it directly correlates to the profitability of the company as a whole.
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).
We first looked for large cap stocks. Next, we then screened for businesses with strong profit margins (1-year operating margin>15%)(1-year fiscal EPS growth rate>10%). From here, we then looked for companies that have a substantial amount of cash on hand (Current Ratio>2)(Quick Ratio>2). We did not screen out any sectors.
Do you think these large-cap stocks are undervalued? Use our list to help with your own analysis.
1) Coach, Inc. (COH)
|Industry:||Textile - Apparel Footwear & Accessories|
Coach, Inc. has a Operating Profit Margin of 31.74% and Earnings Per Share Growth Rate of 25.53% and Current Ratio of 2.82 and Quick Ratio of 2.06. The short interest was 1.73% as of 05/24/2012. Coach, Inc. designs and markets accessories and gifts for women and men in the United States 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.
2) Activision Blizzard, Inc. (ATVI)
|Industry:||Multimedia & Graphics Software|
Activision Blizzard, Inc. has a Operating Profit Margin of 26.05% and Earnings Per Share Growth Rate of 176.08% and Current Ratio of 2.57 and Quick Ratio of 2.49. The short interest was 6.38% as of 05/24/2012. Activision Blizzard, Inc. publishes online, personal computer (PC), console, handheld, and mobile interactive entertainment worldwide. It develops and publishes PC-based computer games and maintains its proprietary online-game related service, Battle.net.
3) Analog Devices Inc. (ADI)
|Industry:||Semiconductor - Integrated Circuits|
Analog Devices Inc. has a Operating Profit Margin of 34.19% and Earnings Per Share Growth Rate of 20.11% and Current Ratio of 8.82 and Quick Ratio of 8.23. The short interest was 1.48% as of 05/24/2012. Analog Devices, Inc. engages in the design, manufacture, and marketing of analog, mixed-signal, and digital signal processing integrated circuits (ICS) used in industrial, automotive, consumer, and communication applications. The company's signal processing products involve in converting, conditioning, and processing real-world phenomena, such as temperature, pressure, sound, light, speed, and motion into electrical signals. Its product range includes data converters, amplifiers and linear products, radio frequency ICs, power management products, sensors based on micro-electro mechanical systems technology and other sensors, and processing products.
4) Cerner Corporation (CERN)
|Industry:||Healthcare Information Services|
Cerner Corporation has a Operating Profit Margin of 20.98% and Earnings Per Share Growth Rate of 26.99% and Current Ratio of 3.59 and Quick Ratio of 3.56. The short interest was 7.42% as of 05/24/2012. Cerner Corporation designs, develops, markets, installs, hosts, and supports healthcare information technology, healthcare devices, and content solutions for healthcare organizations and consumers worldwide. It offers the Cerner Millennium architecture, which combines clinical, financial, and management information systems that provides access to an individual's electronic health record (EHR) at the point of care, and organizes and delivers information for physicians, nurses, laboratory technicians, pharmacists, front and back-office professionals, and consumers. The company also provides the Healthe Intent platform, a cloud-based platform that sits above existing EHR systems and is designed to contain data from any EHR along with claims data, medical evidence, and research to facilitate proactive care.
5) Fastenal Company (FAST)
|Industry:||General Building Materials|
Fastenal Company has a Operating Profit Margin of 20.97% and Earnings Per Share Growth Rate of 34.43% and Current Ratio of 5.71 and Quick Ratio of 2.97. The short interest was 6.10% as of 05/24/2012. 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.
6) Allergan Inc. (AGN)
|Industry:||Drug Manufacturers - Other|
Allergan Inc. has a Operating Profit Margin of 26.57% and Earnings Per Share Growth Rate of 154390.80% and Current Ratio of 4.38 and Quick Ratio of 4.10. The short interest was 1.28% as of 05/24/2012. Allergan, Inc. operates as a multi-specialty healthcare company primarily in the United States, Europe, Latin America, and the Asia Pacific. The company discovers, develops, and commercializes specialty pharmaceutical, biologics, medical device, and over-the-counter products for the ophthalmic, neurological, medical aesthetics, medical dermatological, breast aesthetics, obesity intervention, urological, and other specialty markets worldwide. It operates in two segments, Specialty Pharmaceuticals and Medical Devices.
7) Becton, Dickinson and Company (BDX)
|Industry:||Medical Instruments & Supplies|
Becton, Dickinson and Company has a Operating Profit Margin of 21.09% and Earnings Per Share Growth Rate of 14.11% and Current Ratio of 3.27 and Quick Ratio of 2.45. The short interest was 3.93% as of 05/24/2012. Becton, Dickinson and Company, a medical technology company, develops, manufactures, and sells medical devices, instrument systems, and reagents worldwide. The company's BD Medical segment produces medical devices that are used in various healthcare settings. This segment's products include needles, syringes, and intravenous catheters for medication delivery; prefilled IV flush syringes; syringes, pen needles, and other drugs to treat diabetes; prefillable drug delivery systems; anesthesia needles and trays; sharps disposal containers; and closed-system transfer devices.
8) Alexion Pharmaceuticals, Inc. (ALXN)
Alexion Pharmaceuticals, Inc. has a Operating Profit Margin of 30.23% and Earnings Per Share Growth Rate of 75.18% and Current Ratio of 2.30 and Quick Ratio of 2.03. The short interest was 1.62% as of 05/24/2012. Alexion Pharmaceuticals, Inc., a biopharmaceutical company, engages in the innovation, development, and commercialization of life-transforming therapeutic products for treating patients with severe and ultra-rare disorders in the United States, Europe, Latin America, Japan, and the Asia Pacific. It focuses on developing products for the treatment of diseases in the areas of hematology, nephrology, neurology, metabolic disorders, oncology, and ophthalmology. The company offers Soliris(eculizumab), a therapeutic product for the treatment of patients with paroxysmal nocturnal hemoglobinuria (PNH), a blood disorder; and atypical hemolytic uremic syndrome (aHUS), an ultra-rare and life-threatening genetic disease.
9) Celgene Corporation (CELG)
Celgene Corporation has a Operating Profit Margin of 32.81% and Earnings Per Share Growth Rate of 51.89% and Current Ratio of 3.71 and Quick Ratio of 3.51. The short interest was 1.70% as of 05/24/2012. Celgene Corporation, a biopharmaceutical company, discovers, develops, and commercializes various therapies to treat cancer and immune-inflammatory related diseases primarily in the United States and Europe. The company's commercial stage products include REVLIMID, an oral immunomodulatory drug for the treatment of patients with multiple myeloma and myelodysplastic syndromes (MDS); VIDAZA, a pyrimidine nucleoside analog to treat various subtypes MDS and acute myeloid leukemia; and THALOMID for patients with multiple myeloma, and for the prevention and suppression of the cutaneous manifestation of erythema nodosum leprosum recurrence. It also offers ABRAXANE to treat metastatic breast cancer; and ISTODAX for the treatment of cutaneous and peripheral T-cell lymphoma.
*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.