When it comes to the tech sector, growth and liquidity are key traits for separating the winners from the losers. Growth is what keeps tech companies on the bleeding edge, and liquidity gives a company the power to make key acquisitions, weather possible lulls in demand or the economy, and most importantly, keep a company's doors open. If these are the type of tech stocks you would prefer to invest in, we ran a helpful screen to assist you on your search, and come up with a nice list of companies to investigate.
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.
The current ratio is a liquidity ratio used to determine a company's financial health. The metric illustrates how easily a company 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 it is able to meet current obligations using liquid assets).
We first looked for technology stocks. We then looked for businesses that have high future earnings per share growth forecasts(one-year projected EPS growth rate > 25%). Next, we screened for businesses with a large amount of cash on hand (current ratio > 2) (quick ratio > 2). We did not screen out any market caps.
Do you think these stocks are undervalued and should be trading higher? Use our list along with your own analysis.
1) DSP Group, Inc. (DSPG)
DSP Group, Inc. has a 1-Year Projected Earnings Per Share Growth Rate of 2000.00%, a Current Ratio of 2.74, and a Quick Ratio of 2.26. The short interest was 3.21% as of July 18, 2012. DSP Group, Inc., a fabless semiconductor company, provides wireless chipset solutions for converged communications at home and office.
The company provides a portfolio of wireless chipsets integrating digital enhanced cordless telecommunications (DECT)/cordless advanced technology internet and quality, DECT ultra low energy, Wi-Fi, public switched telephone network, BoneTone intelligent voice enhancement and noise elimination, video, and voice over Internet protocol (VoIP) technologies with application processors.
It enables converged voice, audio, video, and data connectivity across various consumer and business products, including connected multimedia screens, mobile devices, home automation and security devices, cordless phones, VoIP systems, and home gateways.
2) Rubicon Technology, Inc. (RBCN)
|Industry:||Semiconductor - Specialized|
Rubicon Technology, Inc. has a 1-Year Projected Earnings Per Share Growth Rate of 700.00%, a Current Ratio of 13.71, and a Quick Ratio of 8.22. The short interest was 24.59% as of July 18, 2012. Rubicon Technology, Inc. develops, manufactures, and sells monocrystalline sapphire and other crystalline products for light-emitting diodes (LED), radio frequency integrated circuits (RFICs), blue laser diodes, optoelectronics, and other optical applications.
The company fabricates its products from the boules and sells them in various categories, including core, as-cut, as-ground, and polished forms in two, three, four, six, and eight inch diameter wafers. It manufactures sapphire substrates and optical windows, including two inch to four inch sapphire cores and wafers for use in LEDs and blue laser diodes for solid state lighting and electronic applications; six-inch polished sapphire wafers that are used in the LED applications and in silicon-on-sapphire RFICs; and eight inch wafers for research and development efforts, as well as sells sapphire products used for windows and lenses in military, aerospace, sensor, and other applications.
3) Westell Technologies, Inc. (WSTL)
Westell Technologies, Inc. has a 1-Year Projected Earnings Per Share Growth Rate of 700.00%, a Current Ratio of 24.99, and a Quick Ratio of 23.46. The short interest was 4.71% as of July 18, 2012. Westell Technologies, Inc., through its subsidiaries, designs, manufactures, and distributes telecommunications products to telephone companies and other telecommunications service providers. It operates in two segments, Westell and Customer Networking Solutions.
The Westell segment provides a range of indoor and outdoor cabinets, enclosures, and mountings; power distribution products; Ethernet network interface devices (NIDs), industrial switches, and mounting solutions; NIDs for TDM/SONET networks and service demarcation; wireless signal conditioning and monitoring products for cellular networks; span powering equipment; and remote monitoring devices, as well as customized systems integration services to integrated wireline/wireless telecommunications service providers, wireless service providers, and industrial and utility companies.
4) Kopin Corporation (KOPN)
|Industry:||Semiconductor - Broad Line|
Kopin Corporation has a 1-Year Projected Earnings Per Share Growth Rate of 350.00%, a Current Ratio of 6.72, and a Quick Ratio of 5.63. The short interest was 3.61% as of July 18, 2012. Kopin Corporation develops, manufactures, and sells heterojunction bipolar transistor wafers (HBT transistor wafers) and miniature flat panel displays. It offers gallium arsenide-based HBT transistor wafers for advanced integrated circuit applications; and other semiconductor products that use gallium nitride and gallium arsenide-based substrates.
The company's HBT transistor wafers are used in code division multiple access, global system mobile and time division multiple access power amplifiers, third and fourth generation wireless handset standards; in the fabrication of power amplifiers for devices, which communicate using wireless fidelity (WIFI) integrated circuits; and in high-speed fiber optic switching. It also offers pseudomorphic high electron mobility transistors (pHEMT); and BiHEMT, a product which combines the HBT and pHEMTs into a single structure.
5) Imperva (IMPV)
Imperva has a 1-Year Projected Earnings Per Share Growth Rate of 346.20%, a Current Ratio of 3.37, and a Quick Ratio of 3.36. The short interest was 6.61% as of July 18, 2012. Imperva engages in the development, marketing, sales, service, and support of data security solutions that provide visibility and control over high value business data across critical systems within the data center.
It offers SecureSphere Data Security Suite, a solution designed to prioritize and mitigate risks to high-value business data, protect against hackers and malicious insiders, and address and streamline regulatory compliance. The company's SecureSphere is an integrated, modular suite offering database security products designed to secure business data in structured repositories in the data center; file security products designed to secure files, including spreadsheets, presentation slides, word processing documents, and PDFs containing business data stored by customers in unstructured repositories, such as file servers, network attached storage, and storage area network devices; and web application firewall product that protects web applications from cyber attacks and adapts to evolving threats to prevent data breaches.
*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.