Knowing when the time is right to purchase a stock is the key to smart investments. There are different ways of scrutinizing companies, but today we focused on liquidity and growth projections. The two are closely related because when a company has significant cash on hand, they have the funds to do things like ramp up production, make acquisitions, form partnerships, and expand to new markets. None of these growth related activities can occur without money. We searched selectively in the tech industry for stocks that rated high in liquidity and growth projections. Our list provides you with a starting point for further research.
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 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, 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 next screened for businesses with projected high growth, measured by 1-year projected EPS growth above 25%. We then screened for businesses that have strong liquidity (Current Ratio>2)(Quick Ratio>2). We did not screen out any market caps.
Do you think these stocks will break through to new highs? Please use our list to assist with your own analysis.
1) Cepheid (NASDAQ:CPHD)
|Industry:||Scientific & Technical Instruments|
Cepheid has a 1-Year Projected Earnings Per Share Growth Rate of 1700.00%, a Current Ratio of 3.51, and a Quick Ratio of 2.36. The short interest was 13.46% as of 08/10/2012. Cepheid, a molecular diagnostics company, engages in developing, manufacturing, and marketing integrated systems for testing in the clinical market, as well as for application in legacy biothreat, industrial, and partner markets. Its systems enable molecular testing for organisms and genetic-based diseases by automation. The company offers a GeneXpert system that integrates sample preparation in addition to DNA amplification and detection; and SmartCycler system, which integrates DNA amplification and detection to allow rapid analysis of a sample.
2) TriQuint Semiconductor, Inc. (TQNT)
|Industry:||Semiconductor - Integrated Circuits|
TriQuint Semiconductor, Inc. has a 1-Year Projected Earnings Per Share Growth Rate of 2700.00%, a Current Ratio of 4.59, and a Quick Ratio of 3.13. The short interest was 10.77% as of 08/10/2012. TriQuint Semiconductor provides radio frequency (NYSE:RF) solutions and technology for communications, defense, and aerospace companies worldwide. The company designs, develops, and manufactures RF solutions with gallium arsenide (GaAs), gallium nitride, bipolar high electron mobility transistor, surface acoustic wave (SAW), temperature compensated surface acoustic wave, bulk acoustic wave (BAW), copper flip, and wafer level packaging technologies. The company offers an array of filtering, switching, and amplification products for RF, microwave, and millimeter-wave applications.
3) Intermolecular, Inc. (NASDAQ:IMI)
|Industry:||Semiconductor Equipment & Materials|
Intermolecular, Inc. has a 1-Year Projected Earnings Per Share Growth Rate of 1350.00%, a Current Ratio of 7.04, and a Quick Ratio of 6.92. The short interest was 2.26% as of 08/10/2012. Intermolecular, Inc., together with its subsidiaries, provides high productivity combinatorial (HPC) technology products and services. Its HPC platform includes wet processing tools that apply HPC methods to fluids-based applications, such as clean, deposition and wet etch, self-assembly, and surface treatment processes; and dry processing tools, which apply HPC methods to vapor-based applications for primary, secondary, and tertiary screening. The company's HPC platform is also comprised of automated characterization systems to characterize the substrates processed by Tempus HPC processing tools and generates experimental data while matching processing throughput; and informatics software comprising workflow management software, analysis and reporting software, security and collaboration management software, and integration services.
4) CIENA Corp. (NASDAQ:CIEN)
CIENA Corp. has a 1-Year Projected Earnings Per Share Growth Rate of 2700.00%, a Current Ratio of 2.91, and a Quick Ratio of 2.40. The short interest was 24.86% as of 08/10/2012. CIENA provides equipment, software, and service solutions that support the transport, switching, aggregation, and management of voice, video, and data traffic on communications networks worldwide. Its product portfolio consists of packet-optical transport that includes optical transport solutions to increase network capacity and enable delivery of a broader mix of high-bandwidth services; and packet-optical switching, which comprise optical switching platforms incorporating multiservice and multi-protocol switching systems that enable automated optical infrastructures for the delivery of various enterprise and consumer-oriented network services. The company also offers carrier Ethernet solutions, including service delivery switches and service aggregation switches to support the access and aggregation tiers of communications networks, as well as to support wireless backhaul infrastructures and business data services; and software solutions to track individual services across multiple product suites, facilitating planned network maintenance, outage detection, and identification of customers or services affected by network troubles. In addition, CIENA provides consulting and support services, such as project management, deployment, maintenance support, consulting, and training services, as well as network analysis, planning, design, optimization, and tuning.
5) Intersil Corporation (NASDAQ:ISIL)
|Industry:||Semiconductor - Broad Line|
Intersil Corporation has a 1-Year Projected Earnings Per Share Growth Rate of 633.30%, a Current Ratio of 4.76, and a Quick Ratio of 3.96. The short interest was 4.43% as of 08/10/2012. Intersil Corporation designs, develops, manufactures, and markets analog and mixed-signal integrated circuits for applications in the industrial, computing, consumer, and communications electronics markets. The company's industrial products include operational amplifiers, bridge drivers, isolated and non-isolated power management products, switches and multiplexers, video decoders, and other standard analog and power management products used in medical imaging, energy management, automotive, military, instrumentation, security surveillance, and factory automation markets. Its computing products comprise desktop, server, notebook, and network attached storage power management products, including core power devices and other power management products for peripheral devices, as well as lithium ion battery chargers.
6) KEMET Corp. (NYSE:KEM)
KEMET Corp. has a 1-Year Projected Earnings Per Share Growth Rate of 1640.00%, a Current Ratio of 3.38, and a Quick Ratio of 2.11. The short interest was 4.97% as of 08/10/2012. KEMET, together with its subsidiaries, engages in the manufacture and sale of various capacitors under the KEMET brand worldwide. Its products include solid tantalum and aluminum capacitors, multilayer ceramic capacitors, film capacitors, electrolytic capacitors, and paper capacitors. The company offers its products for use in adaptive cruise controls, lane departure warning, rearview camera systems, audio systems, tire pressure monitoring systems, power train electronics, instrumentation, airbag systems, anti-lock braking and stabilization systems, hybrid and electric drive vehicles, electronic engine control modules, driver comfort controls, and security systems in the automotive industry; copiers, point-of-sale terminals, and fax machines in the business equipment industry; and cellular phones, telephones, switching equipment, relays, base stations, and wireless infrastructure in communications industry. It also provides capacitors for use in personal computers, workstations, mainframes, computer peripheral equipment, power supplies, disk drives, printers, and local area networks in the computer-related industry; electronic controls, measurement equipment, instrumentation, solar and wind energy generation, and medical electronics in the industrial sector; DVD players, MP3 players, game consoles, LCD televisions, global positioning systems, and digital still cameras in the consumer sector; avionics, radar, guidance systems, and satellite communications in the military/aerospace industry; and wind generation systems, solar generation systems, geothermal generation systems, tidal generation systems, and electric drive vehicles in the alternative energy industry.
*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.