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. In this article, we are focusing on companies in the basic materials sector that exhibit these traits - we think you'll find our list 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).
EPS growth (earnings per share growth) illustrates the growth of earnings per share over time. The 1-Year Expected EPS Growth Rate is an annual growth estimate, where the growth projections are made by analysts, the company or other credible sources.
We first looked for basic materials stocks. Next, we then screened for businesses with a large amount of cash on hand (Current Ratio>2)(Quick Ratio>2). We then screened for businesses that are considered high-growth, with 1-year projected EPS growth above 25%. We did not screen out any market caps.
Do you think these stocks have a positive future in store? Use our list to help with your own analysis.
1) Freeport-McMoRan Copper & Gold Inc. (FCX)
Freeport-McMoRan Copper & Gold Inc. has a Current Ratio of 3.51 and Quick Ratio of 2.11 and 1-Year Projected Earnings Per Share Growth Rate of 29.78%. The short interest was 1.96% as of 06/01/2012. Freeport-McMoRan Copper & Gold Inc. engages in the exploration, mining, and production of mineral resources. The company primarily explores for copper, gold, molybdenum, cobalt hydroxide, silver, and other metals, such as rhenium and magnetite. It holds interests in various mines located in the Grasberg minerals district in Indonesia; Morenci minerals district in North America; South America; and Tenke Fungurume minerals district in the Democratic Republic of Congo.
2) Arabian American Development Company (ARSD)
|Industry:||Oil & Gas Refining & Marketing|
Arabian American Development Company has a Current Ratio of 3.25 and Quick Ratio of 2.44 and 1-Year Projected Earnings Per Share Growth Rate of 43.08%. The short interest was 0.35% as of 06/01/2012. Arabian American Development Company, through its subsidiaries, owns and operates a petrochemical facility located in southeast Texas, which specializes in high purity petrochemical solvents and other solvent type manufacturing. The company, through its 37% interest in Al Masane Al Kobra Mining Company, owns and develops mining assets for copper, zinc, gold, and silver in Najran province in southwestern Saudi Arabia. Arabian American Development Company was founded in 1967 and is based in Sugar Land, Texas.
3) Allied Nevada Gold Corp. (ANV)
Allied Nevada Gold Corp. has a Current Ratio of 10.62 and Quick Ratio of 7.24 and 1-Year Projected Earnings Per Share Growth Rate of 97.50%. The short interest was 5.55% as of 06/01/2012. Allied Nevada Gold Corp., together with its subsidiaries, engages in the evaluation, acquisition, exploration, and advancement of gold exploration and development projects. It principally operates the Hycroft Mine, an open pit heap leach gold and silver mine covering approximately 61,389 acres of mineral rights located in the west of Winnemucca, Nevada. The company is also involved in the exploration and development of various exploration properties, including Hasbrouck, Mountain View, Three Hills, Wildcat, Maverick Springs, and Pony Creek/Elliot Dome projects.
4) CARBO Ceramics Inc. (CRR)
|Industry:||Oil & Gas Equipment & Services|
CARBO Ceramics Inc. has a Current Ratio of 4.35 and Quick Ratio of 2.33 and 1-Year Projected Earnings Per Share Growth Rate of 25.50%. The short interest was 40.18% as of 06/01/2012. CARBO Ceramics Inc. manufactures and supplies resin-coated ceramic and resin-coated sand proppants primarily used in the hydraulic fracturing of natural gas and oil wells in the United States and internationally. The company offers proppants, including CARBOHSP and CARBOPROP designed for use in deep gas wells; CARBOLITE used in medium depth oil and gas wells; CARBOECONOPROP; CARBOHYDROPROP used to enhance performance in slickwater fracture treatments; CARBOBOND LITE for oil and natural gas wells that are subject to the risk of proppant flow-back; and CARBOBOND RCS, a conductivity proppant. It also provides fracture simulation software, as well as offers fracture design, engineering, and consulting services to oil and natural gas companies.
5) Dril-Quip, Inc. (DRQ)
|Industry:||Oil & Gas Equipment & Services|
Dril-Quip, Inc. has a Current Ratio of 5.47 and Quick Ratio of 3.45 and 1-Year Projected Earnings Per Share Growth Rate of 29.31%. The short interest was 8.06% as of 06/01/2012. Dril-Quip, Inc. designs, manufactures, fabricates, inspects, assembles, tests, and markets engineered offshore drilling and production equipment for use in deepwater, harsh environment, and severe service applications worldwide. Its principal products include subsea and surface wellheads, subsea and surface production trees, subsea control systems and manifolds, mudline hanger systems, specialty connectors and associated pipes, drilling and production riser systems, liner hangers, and wellhead connectors and diverters. The company's products are used to explore for oil and gas on offshore drilling rigs, such as floating rigs and jack-ups.
6) Golden Minerals Company (AUMN)
|Industry:||Industrial Metals & Minerals|
Golden Minerals Company has a Current Ratio of 2.95 and Quick Ratio of 2.55 and 1-Year Projected Earnings Per Share Growth Rate of 234.80%. The short interest was 14.04% as of 06/01/2012. Golden Minerals Company engages in the exploration and development of precious metals and other mineral properties in Mexico and South America. The company explores for gold, silver, copper, zinc, and lead ores, as well as base metals. It primarily owns and operates Velardena and Chicago properties located in the State of Durango, Mexico.
7) Atwood Oceanics, Inc. (ATW)
|Industry:||Oil & Gas Drilling & Exploration|
Atwood Oceanics, Inc. has a Current Ratio of 2.76 and Quick Ratio of 2.21 and 1-Year Projected Earnings Per Share Growth Rate of 31.19%. The short interest was 6.86% as of 06/01/2012. Atwood Oceanics, Inc., an offshore drilling contractor, engages in the drilling and completion of exploratory and developmental oil and gas wells worldwide. The company owns 10 mobile offshore drilling units located in the U.S.
8) Bolt Technology Corp. (BOLT)
|Industry:||Oil & Gas Equipment & Services|
Bolt Technology Corp. has a Current Ratio of 9.87 and Quick Ratio of 6.30 and 1-Year Projected Earnings Per Share Growth Rate of 43.28%. The short interest was 0.38% as of 06/01/2012. Bolt Technology Corporation engages in the development, manufacture, and sale of marine seismic data acquisition equipment and underwater remotely operated robotic vehicles worldwide. It operates through four segments: Seismic Energy Sources, Underwater Cables and Connectors, Seismic Energy Source Controllers, and Underwater Robotic Vehicles. The Seismic Energy Sources segment offers marine seismic energy sources, such as marine air guns for use in seismic exploration; and replacement parts. The Underwater Cables and Connectors segment provides underwater cables, connectors, hydrophones, depth and pressure transducers, and seismic source monitoring systems.
*Company profiles were sourced from Finviz. Financial data was sourced from Google Finance and Yahoo Finance.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.