Company liquidity is an important consideration in any stock analysis. Having cash in the bank gives a company the ability to make big acquisitions if it sees good opportunities, a cushion in case demand slows down, and most importantly, it keeps a company's doors open for business. Additionally, it can accelerate a company's growth. Today 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. We then screened for businesses that have a substantial 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 this list as a starting-off point for your own analysis.
1) Primero Mining Corp. (NYSE:PPP)
Primero Mining Corp. has a Current Ratio of 4.79, a Quick Ratio of 4.74, and a 1-Year Projected Earnings Per Share Growth Rate of 30.00%. The short interest was 0.15% as of 07/01/2012. Primero Mining Corp., a precious metals producer, engages in acquiring, exploring, developing, and operating mineral resource properties Mexico. The company's principal products include gold and silver. It has one producing property, the San Dimas Mine, located in Mexico's San Dimas district, on the border of Durango and Sinaloa states; and one exploration property, the Ventanas property, located in Durango state.
2) Hecla Mining Co. (NYSE:HL)
Hecla Mining Co. has a Current Ratio of 3.63, a Quick Ratio of 3.38, and a 1-Year Projected Earnings Per Share Growth Rate of 77.78%. The short interest was 10.73% as of 07/01/2012. Hecla Mining Company, together with its subsidiaries, discovers, acquires, develops, produces, and markets precious and base metals worldwide. It offers gold and silver to precious metals traders; and lead, zinc, and bulk concentrates to custom smelters. The company has two operating mines and exploration properties that include the Greens Creek mine located in Alaska and the Lucky Friday mine located in northern Idaho. Hecla Mining Company was founded in 1891 and is based in Coeur d'Alene, Idaho.
3) Dril-Quip, Inc. (NYSE:DRQ)
|Industry:||Oil & Gas Equipment & Services|
Dril-Quip, Inc. has a Current Ratio of 5.47, a Quick Ratio of 3.45, and a 1-Year Projected Earnings Per Share Growth Rate of 30.10%. The short interest was 9.24% as of 07/01/2012. Dril-Quip, Inc. designs, manufactures, sells, and services engineered offshore drilling and production equipment for use in deepwater, harsh environment, and severe service applications worldwide. The Company's principal products consist of subsea and surface wellheads, subsea and surface production trees, subsea control systems and manifolds, mudline hanger systems, specialty connectors and associated pipe, drilling and production riser systems, liner hangers, wellhead connectors, and diverters. Its products are primarily used to explore for oil and gas on offshore drilling rigs, such as floating rigs and jack-up rigs; drilling and production of oil and gas wells on offshore platforms; tension leg platforms, which are floating production platforms connected to the ocean floor via vertical mooring tethers; Spars, a floating cylindrical structure; and floating production, storage, and offloading monohull moored vessels.
4) Rentech, Inc. (NYSEMKT:RTK)
Rentech, Inc. has a Current Ratio of 3.77, a Quick Ratio of 3.62, and a 1-Year Projected Earnings Per Share Growth Rate of 133.30%. The short interest was 4.71% as of 07/01/2012. Rentech, Inc., through its subsidiaries, owns and develops technologies that enable the production of synthetic fuels and renewable power when integrated with third-party technologies in the United States. Its clean energy technology portfolio includes the Rentech-SilvaGas and the Rentech-ClearFuels biomass gasification technologies, which produce synthesis gas from biomass and waste materials for the production of renewable power and fuels. The company also owns the patented Rentech Process based on Fischer-Tropsch chemistry that converts synthesis gas from gasification technologies into complex hydrocarbons, which is upgraded into fuels or chemicals.
5) Allied Nevada Gold Corp. (NYSEMKT:ANV)
Allied Nevada Gold Corp. has a Current Ratio of 10.62, a Quick Ratio of 7.24, and a 1-Year Projected Earnings Per Share Growth Rate of 89.26%. The short interest was 7.67% as of 07/01/2012. 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.
6) IAMGOLD Corp. (NYSE:IAG)
IAMGOLD Corp. has a Current Ratio of 4.60, a Quick Ratio of 3.86, and a 1-Year Projected Earnings Per Share Growth Rate of 33.61%. The short interest was 0.45% as of 07/01/2012. IAMGOLD Corporation, a mid-tier gold mining company, engages in the exploration, development, and production of mineral resource properties. It primarily explores for gold, silver, zinc, copper, niobium, diamonds, and other metals. The company holds interests in five operating gold mines, a niobium mine, a diamond royalty, and exploration and development projects located in Africa and the Americas. Its development projects include the Westwood project located in the Abitibi region, Qubec, Canada; the Quimsacocha project located in southern Ecuador; and the Camp Caiman project located in northeastern French Guiana, South America.
7) Molycorp, Inc. (MCP)
|Industry:||Industrial Metals & Minerals|
Molycorp, Inc. has a Current Ratio of 3.58, a Quick Ratio of 3.09, and a 1-Year Projected Earnings Per Share Growth Rate of 169.57%. The short interest was 26.38% as of 07/01/2012. Molycorp, Inc., a development stage company, engages in the production and sale of rare earth oxides in the western hemisphere. Its rare earth products include oxides, metals, alloys, and magnets for various inputs in existing and emerging applications comprising clean energy technologies, multiple high-tech uses, defense applications, and water treatment technology. The company primarily owns and operates the Molycorp Mountain Pass facility, an open-pit mine containing rare earth deposits outside of China located in San Bernardino County, California.
8) Kraton Performance Polymers Inc. (NYSE:KRA)
Kraton Performance Polymers Inc. has a Current Ratio of 4.37, a Quick Ratio of 2.42, and a 1-Year Projected Earnings Per Share Growth Rate of 25.97%. The short interest was 5.71% as of 07/01/2012. Kraton Performance Polymers, Inc., through its subsidiary, Kraton Polymers LLC, engages in the development, production, and marketing of styrenic block copolymers (SBCs) and non-SBC products worldwide. The company offers approximately 250 core commercial grades of SBCs. Its products include unhydrogenated SBCs that are primarily used in paving and roofing, adhesives, sealants, coatings, and footwear applications; hydrogenated SBCs that are primarily used in soft touch and flexible materials, personal hygiene products, medical products, automotive components, adhesives, and sealants; and isoprene rubber products for use in the production of medical products, adhesives, tackifiers, paints, coatings, and photo-resistors.
*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.