Are you Interested in financial companies? Do you feel better knowing your favorite companies have enough cash to cover their operating expenses for a very long time? Do you prefer stocks that can bring in profits over the long term? We ran a screen you could find useful.
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 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 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 financial stocks. From here, we then looked for companies that have shown strong bottom line growth over the last year (1-year fiscal EPS growth rate>10%)(Net Margin [TTM] >10%). From here, we then looked for companies that have strong liquidity (Current Ratio>2)(Quick Ratio>2). We did not screen out any market caps.
Do you think these stocks have what it takes to grow? Use this list as a starting-off point for your own analysis.
1) Tejon Ranch Co. (TRC)
Tejon Ranch Co. has a Earnings Per Share Growth Rate of 254.29%, a Net Margin of 14.63%, a Current Ratio of 12.85, and a Quick Ratio of 12.12. The short interest was 3.04% as of 06/18/2012. Tejon Ranch Co., together with its subsidiaries, engages in the real estate development and agribusiness business activities in the United States. The company operates in three segments: Commercial/Industrial Real Estate Development and Services, Resort/Residential Real Estate Development, and Farming. The Commercial/Industrial Real Estate Development and Services segment involves in entitling, planning, and permitting land for development; the construction of infrastructure, pre-leased buildings, and buildings to be leased or sold; and the sale of land to third parties.
2) Nationstar Mortgage Holdings Inc. (NSM)
Nationstar Mortgage Holdings Inc. has a Earnings Per Share Growth Rate of 38.86%, a Net Margin of 19.65%, a Current Ratio of 8.18, and a Quick Ratio of 7.50. The short interest was 0.32% as of 06/18/2012. Nationstar Mortgage Holdings Inc., through its subsidiary, Nationstar Mortgage LLC, engages in the servicing of residential mortgage loans in the United States. It is also involved in the origination and sale or securitization of single-family conforming mortgage loans to government-sponsored entities or other third party investors in the secondary market. The company services a range of mortgage loans, including prime and non-prime loans, traditional and reverse mortgage loans, and GSE and government agency-insured loans, as well as private-label loans issued by non-government affiliated institutions.
3) First Cash Financial Services Inc. (FCFS)
First Cash Financial Services Inc. has a Earnings Per Share Growth Rate of 36.01%, a Net Margin of 13.53%, a Current Ratio of 4.22, and a Quick Ratio of 3.09. The short interest was 10.82% as of 06/18/2012. First Cash Financial Services, Inc. operates retail-based pawn and consumer finance stores in the United States and Mexico. Its pawn stores lend money on the collateral of pledged personal property, such as jewelry, electronic equipment, household appliances, tools, sporting goods, and musical instruments; and engage in the retail of previously owned merchandise acquired through pawn forfeitures and purchased from the general public. The company's consumer finance stores provide consumer financial services, including credit services, consumer loans, check cashing, money orders, money transfers, and prepaid card products.
*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.