6 Analyst Backed Tech Stocks With Cash Reserves

by: ZetaKap

The market is full of technology companies and it can be difficult to discern the rising stars from those that are smoke and mirrors. For investors interested in delving deeper, we have come up with a double screen. First we looked for companies with abundant cash reserves. From there we picked out those with the best ratings from analysts. For your review we have listed the ones that rose to the top of the pile.

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 technology stocks. We then looked for businesses with a large amount of cash on hand (Current Ratio>2)(Quick Ratio>2). We next screened for businesses that analysts rate as "Buy" or "Strong Buy" (mean recommendation < 3). We did not screen out any market caps.

Do you think these stocks will trade at a higher valuation? Use our screened list as a starting point for your own analysis.

1) Oplink Communications, Inc. (NASDAQ:OPLK)

Sector: Technology
Industry: Semiconductor - Integrated Circuits
Market Cap: $252.16M
Beta: 1.51

Oplink Communications Inc. has a Current Ratio of 9.40, a Quick Ratio of 8.63, and an Analysts' Rating of 1.30. The short interest was 4.00% as of July 27, 2012. Oplink Communications, Inc., together with its subsidiaries, designs, manufactures, and sells optical networking components and subsystems worldwide. The company's products are used to expand optical bandwidth, amplify optical signals, monitor and protect wavelength performance, redirect light signals, ensure signal connectivity, and provide signal transmission and reception within an optical network.

It offers bandwidth creation products, such as wavelength expansion products comprising dense wavelength division multiplexers (DWDM), coarse wavelength division multiplexers, band wavelength division multiplexers, and DWDM interleavers; and optical amplification products consisting of gain blocks, erbium doped fiber amplifiers, wavelength division multiplexers pump/signal combiners, integrated hybrid components, WDM pump combiners, polarization beam combiners, gain flattening filters isolators, isolators, and tap couplers.

2) FormFactor, Inc. (NASDAQ:FORM)

Sector: Technology
Industry: Semiconductor - Broad Line
Market Cap: $294.68M
Beta: 1.21

FormFactor Inc. has a Current Ratio of 9.49, a Quick Ratio of 8.92, and an Analysts' Rating of 2.30. The short interest was 4.72% as of July 27, 2012. FormFactor, Inc. designs, develops, manufactures, sells, and supports semiconductor wafer probe card products and solutions worldwide. Its wafer probe card is used as an interface to connect electrically with and test individual chips on a wafer.

The company's wafer probe cards are also used to test dynamic random access memory (DRAM) chips, including double data rate (DDR), DDR2, DDR3, SDRAM, PSRAM, mobile DRAM, graphic DRAM, NOR and NAND flash memory chips, serial data devices, chipsets, microprocessors, microcontrollers, and analog devices.

3) NVE Corporation (NASDAQ:NVEC)

Sector: Technology
Industry: Semiconductor - Specialized
Market Cap: $262.02M
Beta: 0.65

NVE Corp. has a Current Ratio of 9.95, a Quick Ratio of 8.70, and an Analysts' Rating of 2.00. The short interest was 4.94% as of July 27, 2012. NVE Corporation engages in the development and sale of devices that use spintronics, a nanotechnology, which relies on electron spin to acquire, store, and transmit information. The company manufactures high-performance spintronic products, including sensors and couplers that are used to acquire and transmit data.

Its products comprise standard sensors to detect the presence of a magnetic or metallic material to determine position or speed primarily for factory automation market; and custom and medical sensors for medical devices to replace electromechanical magnetic switches. The company also offers spintronic couplers, such as passive-input couplers, high-speed couplers, and isolated network couplers in various series.

4) O2Micro International Limited (NASDAQ:OIIM)

Sector: Technology
Industry: Semiconductor - Integrated Circuits
Market Cap: $123.62M
Beta: 1.56

O2Micro International Ltd. has a Current Ratio of 9.56, a Quick Ratio of 9.04, and an Analysts' Rating of 1.60. The short interest was 0.09% as of July 27, 2012. O2Micro International Limited designs, develops, and markets integrated circuits for power management and e-commerce components and systems. The company offers analog and mixed-signal integrated circuit products that manage and provide LCD and LED lighting; provide connections between notebook computers and external plug-in cards; control and monitor battery charging and discharging in portable electronic devices and automobiles; perform DC/DC and AC/DC conversion; and provide select and switch functionality between power sources.

Its products are primarily used in the consumer electronics, computer, industrial, communications, and automotive markets for applications, such as LCD and LED monitors, LCD and LED televisions, notebook computers, tablet computers, low/zero emission vehicles, mobile phones, energy efficient technology relating to batteries, LED lighting, and portable media players. The company sells its products through direct sales force, independent sales representatives, and distributors to OEMs, ODMs, and module makers in China, Europe, Japan, Korea, Singapore, Taiwan, the United Kingdom, and the United States.

5) Supertex, Inc. (NASDAQ:SUPX)

Sector: Technology
Industry: Semiconductor - Integrated Circuits
Market Cap: $193.56M
Beta: 0.91

Supertex Inc. has a Current Ratio of 9.69, a Quick Ratio of 8.87, and an Analysts' Rating of 2.50. The short interest was 2.92% as of July 27, 2012. Supertex, Inc., together with its subsidiary, Supertex Limited, designs, develops, manufactures, and markets high voltage analog and mixed signal integrated circuits (IC) primarily in the United States, China, Singapore, rest of Asia, and Europe.

The company offers high voltage analog multiplexer switches, pulsers, beam formers, transmit/receive switches, low noise amplifiers, high-speed MOSFET drivers, and discrete high voltage MOSFETs and arrays for the medical electronics market. It also provides light emitting diode (LED) driver products, such as linear regulators and switching regulators for general lighting in automotive, industrial, and consumer applications; and for backlighting in LCD TVs, monitors, and laptop screens.


Sector: Technology
Industry: Semiconductor - Integrated Circuits
Market Cap: $109.89M
Beta: 1.79

AXT Inc has a Current Ratio of 9.52, a Quick Ratio of 5.81, and an Analysts' Rating of 1.70. The short interest was 4.83% as of July 27, 2012. AXT, Inc., together with its subsidiaries, designs, develops, manufactures, and distributes compound and single element semiconductor substrates for use in wireless communications, lighting display applications, and fiber optic communications.

It offers semi-insulating gallium arsenide substrates, which are used for applications in power amplifiers and radio frequency integrated circuits for wireless handsets; direct broadcast televisions; high-performance transistors; and satellite communications. The company also offers semi-conducting gallium arsenide substrates, which are used for applications in light emitting diodes, lasers, and optical couplers; substrates made from indium phosphide that are used in broadband and fiber optic communications; and substrates made from germanium, which are used in satellite and terrestrial solar cells, and optical applications.

*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.