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Do you value companies with strong liquidity? We ran a screen with that idea in mind.

We began by screening the industrial goods sector for stocks with strong liquidity, with current ratios above 3. The current ratio is current assets/current liabilities, so ratios above 3 indicate the company has at least 3 times the liquid assets to cover their short-term liabilities.

Then to analyze these companies' profitability, we ran DuPont analysis on the names. DuPont analyzes profitability by breaking up return on equity (net income/equity) into three components:

ROE

= (Net Profit/Equity)

= (Net profit/Sales)*(Sales/Assets)*(Assets/Equity)

= (Net Profit margin)*(Asset turnover)*(Leverage ratio)

Because increases in net margin and asset turnover are considered good things, DuPont focuses on companies with these positive characteristics: Increasing ROE along with,

•Decreasing leverage, (i.e. decreasing Asset/Equity ratio)

•Improving asset use efficiency (i.e. increasing Sales/Assets ratio) and improving net profit margin (i.e. increasing Net Income/Sales ratio)

Those companies that pass DuPont are seeing positive trends in the sources of their increasing profitability, which adds further weight to the idea that the names are profitable.

For an interactive version of this chart, click on the image below. Analyst ratings sourced from Zacks Investment Research.

Tool provided by Kapitall. More investing ideas on Kapitall Wire.

Do you think these stocks are poised to move higher? Use this list as a starting point for your own analysis.

List sorted by current ratio.

1. RBC Bearings Inc. (ROLL): Makes and markets precision plain, roller, and ball bearings in North America, Europe, and Latin America. Market cap at $1.04B, most recent closing price at $47.0. Current ratio at 7.17. MRQ net profit margin at 13.95% vs. 11.1% y/y. MRQ sales/assets at 0.242 vs. 0.209 y/y. MRQ assets/equity at 1.191 vs. 1.291 y/y.

2. AZZ Incorporated (AZZ): Manufactures electrical equipment and components for power generation, transmission and distribution, and industrial markets primarily in the United States and Canada. Market cap at $793.79M, most recent closing price at $62.80. Current ratio at 3.94. MRQ net profit margin at 12.58% vs. 8.28% y/y. MRQ sales/assets at 0.209 vs. 0.2 y/y. MRQ assets/equity at 2.022 vs. 2.164 y/y.

3. TransDigm Group Incorporated (TDG): Designs, produces, and supplies engineered aircraft components for use on commercial and military aircraft principally in the United States. Market cap at $6.21B, most recent closing price at $121.63. Current ratio at 3.88. MRQ net profit margin at 19.26% vs. 18.34% y/y. MRQ sales/assets at 0.081 vs. 0.069 y/y. MRQ assets/equity at 5.226 vs. 6.576 y/y.

4. Rockwell Automation Inc. (ROK): Provides industrial automation power, control, and information solutions. Market cap at $9.69B, most recent closing price at $67.90. Current ratio at 3.87. MRQ net profit margin at 12.22% vs. 11.84% y/y. MRQ sales/assets at 0.29 vs. 0.285 y/y. MRQ assets/equity at 2.8 vs. 2.808 y/y.

5. Alamo Group, Inc. (ALG): Provides equipment and related replacement parts for maintenance and agriculture. Market cap at $345.8M, most recent closing price at $29.01. Current ratio at 3.81. MRQ net profit margin at 4.36% vs. 4.03% y/y. MRQ sales/assets at 0.346 vs. 0.338 y/y. MRQ assets/equity at 1.571 vs. 1.587 y/y.

6. Spirit AeroSystems Holdings Inc (SPR): Designs, engineers, and manufactures commercial aircraft structures worldwide. Market cap at $3.34B, most recent closing price at $23.35. Current ratio at 3.68. MRQ net profit margin at 5.81% vs. 3.3% y/y. MRQ sales/assets at 0.241 vs. 0.204 y/y. MRQ assets/equity at 2.565 vs. 2.765 y/y.

7. Altra Holdings, Inc. (AIMC): Designs, produces, and markets a range of mechanical power transmission and motion control products worldwide. Market cap at $448.28M, most recent closing price at $16.64. Current ratio at 3.39. MRQ net profit margin at 5.65% vs. 5.39% y/y. MRQ sales/assets at 0.297 vs. 0.257 y/y. MRQ assets/equity at 2.798 vs. 3.125 y/y.

8. Lindsay Corporation (LNN): Designs, manufactures, and sells automated agricultural irrigation systems that are primarily used in the agricultural industry to increase or stabilize crop production while conserving water, energy, and labor in the United States and internationally. Market cap at $931.61M, most recent closing price at $73.24. Current ratio at 3.39. MRQ net profit margin at 10.94% vs. 9.96% y/y. MRQ sales/assets at 0.413 vs. 0.406 y/y. MRQ assets/equity at 1.38 vs. 1.422 y/y.

*Accounting data sourced from Google Finance, all other data sourced from Finviz.

Source: 8 Highly Liquid Industrial Goods Stocks With Strong Sources Of Profitability