Companies that can turn a profit are always nice, but companies that can also continually add to their war-chests are even better. Having cash on hand is an advantage, because companies can consider making strategic growth acquisitions, or invest in themselves by putting more money into R & D. Having plenty of cash is especially advantageous to tech companies, who always have to stay cutting edge. Today we focused on tech companies that can not only bring in profits, but that also have enough cash to possibly make a big play. We think you'll find our list rather interesting.
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
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.
We first looked for mid cap technology stocks. From here, we then looked for companies that have a substantial amount of cash on hand (Current Ratio>2)(Quick Ratio>2). We then screened for businesses with strong profitability (Net Margin [TTM] >10%)(1-year operating margin>15%).
Do you think these mid-cap stocks will go up in valuation? Use our list along with your own analysis.
1) International Game Technology (NYSE:IGT)
|Industry:||Multimedia & Graphics Software|
International Game Technology has a Current Ratio of 2.16 and Quick Ratio of 2.00 and Net Margin of 13.12% and Operating Profit Margin of 23.54%. The short interest was 2.21% as of 06/01/2012. International Game Technology engages in the design, development, manufacture, and marketing of electronic gaming equipment and systems worldwide. The company offers casino-style slot machines that determine the game play outcome at the machine; wide area progressive jackpot systems with linked machines across various casinos; and central determination system machines connected to a central server, which determines the game outcome, encompassing video lottery terminals used primarily in government-sponsored applications and electronic or video bingo machines. Its systems products include infrastructure and applications for casino management, customer relationship management (NYSE:CRM), server-based games, and player management.
2) KLA-Tencor Corporation (NASDAQ:KLAC)
|Industry:||Semiconductor Equipment & Materials|
KLA-Tencor Corporation has a Current Ratio of 4.57 and Quick Ratio of 3.83 and Net Margin of 23.74% and Operating Profit Margin of 32.85%. The short interest was 3.74% as of 06/01/2012. KLA-Tencor Corporation designs, manufactures, and markets process control and yield management solutions for the semiconductor and related nanoelectronics industries. It offers equipment comprising wafer and integrated circuit (IC) defect monitoring, review, and classification; reticle defect inspection and metrology; packaging and interconnect inspection; critical dimension metrology; pattern overlay metrology; film thickness, surface topography, and composition measurements; measurement of in-chamber process conditions, wafer shape, and stress metrology; computational lithography tools; and yield and fab-wide data management and analysis systems. The company also provides products that serve the high brightness light emitting diode, data storage, and photovoltaic industries, as well as general materials research.
3) IPG Photonics Corporation (NASDAQ:IPGP)
|Industry:||Semiconductor - Integrated Circuits|
IPG Photonics Corporation has a Current Ratio of 6.28 and Quick Ratio of 5.08 and Net Margin of 25.75% and Operating Profit Margin of 37.49%. The short interest was 13.81% as of 06/01/2012. IPG Photonics Corporation develops and manufactures fiber lasers, fiber amplifiers, and diode lasers. Its laser products include low, medium, and high output power lasers from 0.5 to 2 microns in wavelength; fiber pigtailed packaged diodes and fiber coupled direct diode laser systems; high-energy pulsed lasers, multi-wavelength and tunable lasers, and single-polarization and single-frequency lasers; solid-state lasers; laser diode chips and packaged laser diodes operating at 9XX nanometers; and high power optical fiber delivery cables, fiber couplers, beam switches, chillers, and accessories.
4) Bally Technologies, Inc. (NYSE:BYI)
Bally Technologies, Inc. has a Current Ratio of 2.43 and Quick Ratio of 2.00 and Net Margin of 11.81% and Operating Profit Margin of 20.11%. The short interest was 8.03% as of 06/01/2012. Bally Technologies, Inc. operates as a diversified gaming company. The company designs, manufactures, operates, and distributes technology-based gaming devices, systems, and server-based solutions worldwide. It offers technology solutions, which provide gaming operators with a range of marketing, data management and analysis, accounting, player tracking, security, and other software applications and tools to manage their operations.
5) Microchip Technology Inc. (NASDAQ:MCHP)
|Industry:||Semiconductor - Specialized|
Microchip Technology Inc. has a Current Ratio of 8.13 and Quick Ratio of 7.26 and Net Margin of 24.34% and Operating Profit Margin of 28.67%. The short interest was 11.52% as of 06/01/2012. Microchip Technology Incorporated engages in the design, development, manufacture, and market of semiconductor products for embedded control applications. Its product portfolio includes microcontrollers, such as 8-bit, 16-bit, and 32-bit microcontrollers marketed under the PIC brand name, as well as 16-bit dsPIC digital signal controllers (DSC); and development tools that enable system designers to program a PIC microcontroller and dsPIC DSC for specific applications. The company also offers analog and interface products, including power management, linear, mixed-signal, thermal management, RF Linear drivers, safety and security, and interface products; and technology licensing products. In addition, it licenses flash intellectual property solutions, and provides assembly and test services for semiconductor manufacturers.
6) Dolby Laboratories, Inc. (NYSE:DLB)
Dolby Laboratories, Inc. has a Current Ratio of 8.64 and Quick Ratio of 8.53 and Net Margin of 31.68% and Operating Profit Margin of 44.17%. The short interest was 4.65% as of 06/01/2012. Dolby Laboratories, Inc. provides products, services, and technologies for the entertainment industry worldwide. It designs and manufactures video and audio products for film production, cinema, and television broadcast industries; and provides services to support film production, television broadcast, and music production. The company is involved in licensing technologies in signal processing systems that enhance sound quality or enable surround sound in movie soundtracks, DVDs, Blu-ray Discs, personal computers, digital televisions, mobile devices, video games, satellite and cable broadcasts, and online streaming; and developing technologies for mobile devices for 3D, digital cinema, post-production, and LED backlit LCD televisions.
7) Linear Technology Corp. (NASDAQ:LLTC)
|Industry:||Semiconductor - Specialized|
Linear Technology Corp. has a Current Ratio of 9.18 and Quick Ratio of 8.66 and Net Margin of 34.98% and Operating Profit Margin of 46.91%. The short interest was 3.24% as of 06/01/2012. Linear Technology Corporation, together with its subsidiaries, designs, manufactures, and markets various analog integrated circuits worldwide. The company produces power management, data conversion, signal conditioning, RF and interface ICs, and Module subsystems. Its products comprise amplifiers, high speed amplifiers, voltage regulators, voltage references, interface, data converters, radio frequency circuits, power over Ethernet controllers, Module power products, and single chain Module products, as well as other liner circuits. The company's product applications include telecommunications, cellular telephones, networking products, tablet, notebook, and desktop computers; computer peripherals, video/multimedia, industrial instrumentation, and security monitoring devices; consumer products, such as digital cameras and global positioning systems; complex medical devices, automotive electronics, factory automation, and process control; and military, space, and other harsh environment systems.
8) Maxim Integrated Products Inc. (NASDAQ:MXIM)
|Industry:||Semiconductor - Broad Line|
Maxim Integrated Products Inc. has a Current Ratio of 3.74 and Quick Ratio of 3.24 and Net Margin of 15.25% and Operating Profit Margin of 23.78%. The short interest was 0.67% as of 06/01/2012. Maxim Integrated Products, Inc. engages in designing, developing, manufacturing, and marketing various linear and mixed-signal integrated circuits worldwide. The company also provides various high-frequency process technologies and capabilities for use in custom designs. It primarily serves industrial, communications, consumer, and computing markets.
9) MICROS Systems, Inc. (NASDAQ:MCRS)
MICROS Systems, Inc. has a Current Ratio of 2.97 and Quick Ratio of 2.88 and Net Margin of 14.88% and Operating Profit Margin of 20.79%. The short interest was 1.41% as of 06/01/2012. MICROS Systems, Inc. designs, manufactures, markets, and services enterprise information solutions for the hospitality and specialty retail industries. The company's enterprise solutions comprise hotel information systems, restaurant information systems, and specialty retail information systems. The hotel information systems include property based management systems, modules and applications, central reservation systems, sales and catering systems, customer information systems, revenue management systems, and an Internet/global distribution system based hotel reservation service called myfidelio.
*Company profiles were sourced from Finviz. Financial data was sourced from Finviz and Yahoo Finance.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.