Timing plays a major role when it comes to investing. There are multiple methods for analyzing when the timing is right. Two intertwining indicators are liquidity and growth projections. When the two are well paired, a company has the financing to realize their growth projections. Today we searched for dividend stocks of this nature. We came up with a short, but interesting list to start your research.
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 dividend stocks. We then looked for businesses with a large amount of cash on hand (Current Ratio>2)(Quick Ratio>2). Next, we then screened for businesses with projected high growth, measured by 1-year projected EPS growth above 25%. We did not screen out any market caps or sectors.
Do you think these stocks deserve to trade higher? Use our screened list as a starting point for your own analysis.
1) Ennis Inc. (EBF)
Ennis Inc. has a Dividend Yield of 5.07%, a Payout Ratio of 70.01%, a Current Ratio of 5.21, a Quick Ratio of 2.25, and a 1-Year Projected Earnings Per Share Growth Rate of 67.91%. The short interest was 3.26% as of 08/02/2012. Ennis, Inc., together with its subsidiaries, engages in the print and manufacture of business forms and other business products. The company operates in two segments, Print and Apparel. The Print segment designs, manufactures, and sells business forms and other printed business products.
2) Freeport-McMoRan Copper & Gold Inc. (FCX)
Freeport-McMoRan Copper & Gold Inc. has a Dividend Yield of 3.73%, a Payout Ratio of 33.70%, a Current Ratio of 3.46, a Quick Ratio of 2.09, and a 1-Year Projected Earnings Per Share Growth Rate of 41.76%. The short interest was 2.68% as of 08/02/2012. Freeport-McMoRan Copper & Gold Inc. engages in the exploration, mining, and production of mineral resources. The company primarily explores for copper, gold, molybdenum, cobalt hydroxide, silver, and other metals, such as rhenium and magnetite. It holds interests in various mines located in the Grasberg minerals district in Indonesia; Morenci minerals district in North America; South America; and Tenke Fungurume minerals district in the Democratic Republic of Congo.
3) Hooker Furniture Corp. (HOFT)
|Industry:||Home Furnishings & Fixtures|
Hooker Furniture Corp. has a Dividend Yield of 3.40%, a Payout Ratio of 77.90%, a Current Ratio of 5.70, a Quick Ratio of 4.06, and a 1-Year Projected Earnings Per Share Growth Rate of 58.33%. The short interest was 6.82% as of 08/02/2012. Hooker Furniture Corporation, a home furnishings marketing and logistics company, together with its subsidiaries, designs, develops, imports, manufactures, and markets residential wood, metal, and upholstered furniture products in North America. The company offers casegoods products, including home entertainment, home office, accent, dining, and bedroom furniture under the Hooker Furniture, Envision, and Opus Designs by Hooker brand names; upholstered furniture under the Bradington-Young, Seven Seas, and Sam Moore brand names; upscale motion and stationary leather furniture; youth furniture under the Opus Designs by Hooker brand name; and private label products. It also offers various residential leather and fabric upholstered furniture under the Bradington-Young and Seven Seas upholstery brand; specializes in leather reclining and motion chairs, sofas, club chairs, and executive desk chairs; and offers upscale occasional chairs and other seating under the Sam Moore upholstery brand. The company serves retailers of residential home furnishings, including independent furniture stores, specialty retailers, department stores, catalog and Internet merchants, interior designers, and national and regional retail chains.
*Company profiles were sourced from Google Finance and Yahoo Finance. Financial data was sourced from Finviz.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.