To lots of investors, tech can seem like a risky bet. But what if the company has strong cash reserves? After all, having cash can fuel innovative R & D, strategic acquisitions, or long term investments, all of which could make a stock a homerun. Today, we focused on technology stocks that have strong cash reserves built up, and that analysts have rated positively in recent months. We came up with a pretty interesting list. We hope you like it.
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 mid cap technology stocks. We then looked for companies that analysts rate as "Buy" (2 < mean recommendation < 3). We then screened for businesses that have a substantial amount of cash on hand (Current Ratio>2)(Quick Ratio>2).
Do you think these mid-cap stocks have strong fundamentals? Use this list as a starting-off point for your own analysis.
1) Lam Research Corporation (LRCX)
|Industry:||Semiconductor Equipment & Materials|
Lam Research Corporation has a Analysts' Rating of 2.30, a Current Ratio of 5.25, and a Quick Ratio of 4.68. The short interest was 16.29% as of 07/06/2012. Lam Research Corporation designs, manufactures, markets, refurbishes, and services semiconductor processing equipments used in the fabrication of integrated circuits. The company offers etch products that remove portions of various films from the wafer in the creation of semiconductor devices. Its etch products include dielectric etch, conductor etch, three-dimensional integrated circuit etch, MEMS devices, CMOS image sensors, and power devices for etching process.
2) Marvell Technology Group Ltd. (MRVL)
|Industry:||Semiconductor - Integrated Circuits|
Marvell Technology Group Ltd. has a Analysts' Rating of 2.30, a Current Ratio of 4.80, and a Quick Ratio of 4.24. The short interest was 1.41% as of 07/06/2012. Marvell Technology Group Ltd. designs, develops, and markets analog, mixed-signal, digital signal processing, and embedded and standalone ARM-based microprocessor integrated circuits. It offers mobile and wireless products comprising communications processors; modem processors; Wi-Fi and other communication protocols, including Bluetooth and/or FM; mobile computing products; and connected home computing products. The company also provides a range of integrated data storage products, including hard disk drive, solid-state drive, hybrid hard disk drive, and optical disk drive controllers, as well as storage-system products.
3) NVIDIA Corporation (NVDA)
|Industry:||Semiconductor - Specialized|
NVIDIA Corporation has a Analysts' Rating of 2.40, a Current Ratio of 4.26, and a Quick Ratio of 3.89. The short interest was 1.51% as of 07/06/2012. NVIDIA Corporation provides graphics chips for use in smartphones, personal computers (PC), tablets, and professional workstations markets worldwide. It operates in three segments: Graphic Processing Unit (GPU), Professional Solutions Business [PSB], and Consumer Products Business [CPB]. The GPU segment offers GeForce discrete graphics and chipset products, which support desktop and notebook PC's, as well as sells flash memory products.
4) Cree, Inc. (CREE)
|Industry:||Semiconductor Equipment & Materials|
Cree, Inc. has a Analysts' Rating of 2.30, a Current Ratio of 7.20, and a Quick Ratio of 5.97. The short interest was 17.95% as of 07/06/2012. Cree, Inc. develops and manufactures light emitting diodes [LEDS], LED lighting, and semiconductor solutions for wireless and power applications. Its LED products include blue and green LED chips that are used in various applications, including video screens, gaming displays, function indicator lights, and automotive backlighting; LED components comprising a range of packaged LED products and LED modules for lighting applications; LED lighting products, such as LED downlights, LED troffers, and LED lamps or bulbs for construction, retrofit, and renovation projects in commercial, governmental, and residential applications; and silicon carbide (SiC) wafers, which are used in the manufacture of optoelectronics, microwave, power switching, and other applications. The company also provides semiconductor materials and devices primarily based on silicon carbide (SiC), gallium nitride (GaN), and related compounds.
5) Riverbed Technology, Inc. (RVBD)
|Industry:||Networking & Communication Devices|
Riverbed Technology, Inc. has a Analysts' Rating of 2.50, a Current Ratio of 2.64, and a Quick Ratio of 2.51. The short interest was 5.88% as of 07/06/2012. Riverbed Technology, Inc. provides solutions to the fundamental problems associated with information technology performance across wide area networks (WANs) in the United States and internationally. It primarily offers Steelhead products, which enable its customers to improve the performance of their applications and access to their data across WANs, as well as supports the riverbed services platform. The company's Steelhead product family includes the Steelhead Mobile client software application that provides mobile workers with LAN-like access to corporate files and applications; Virtual Steelhead appliance to extend the reach of WAN optimization; Cloud Steelhead, a solution that is purpose-built for public cloud computing environments; Central Management Console that provides centralized configuration, monitoring, and control for simplifying the process of deploying and managing Steelhead products distributed across a WAN; and Interceptor appliance, which allows organizations to scale their WAN optimization solutions.
6) International Game Technology (IGT)
|Industry:||Multimedia & Graphics Software|
International Game Technology has a Analysts' Rating of 2.20, a Current Ratio of 2.16, and a Quick Ratio of 2.00. The short interest was 3.41% as of 07/06/2012. 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 [CRM], server-based games, and player management.
7) Bally Technologies, Inc. (BYI)
Bally Technologies, Inc. has a Analysts' Rating of 2.20, a Current Ratio of 2.43, and a Quick Ratio of 2.00. The short interest was 8.65% as of 07/06/2012. 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.
*Company profiles were sourced from Finviz. Financial data was sourced from Finviz and Google Finance.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.