Investing in large cap stocks as a growth strategy might seem counter-intuitive, but what if those large caps are sitting on large piles of cash? After all, nothing else can fuel growth quite like liquid assets: they're useful for marking smart, strategic mergers or acquisitions, investing back ground-breaking research and development, and not to mention for floating a company through tough economic times while competitors languish. Today we searched for large cap companies with hearty cash reserves, as well as strong growth forecasted on the horizon. We think you will be intrigued by the list of companies our screen produced; use it as a place to start your own research and analysis.
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 large cap stocks. We next screened 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 sectors.
Do you think these large-cap stocks have strong enough fundamentals to move higher? Use our list along with your own analysis.
1) Goldcorp Inc. (GG)
Goldcorp Inc. has a Current Ratio of 2.92, a Quick Ratio of 2.15, and a 1-Year Projected Earnings Per Share Growth Rate of 43.52%. The short interest was 1.08% as of 08/12/2012. Goldcorp Inc. engages in the acquisition, development, exploration, and operation of precious metal properties. It primarily explores gold, silver, copper, lead, and zinc. The company's principal mining properties include Red Lake, Porcupine, and Musselwhite gold mines in Canada; Peasquito gold/silver/lead/zinc mine, and Los Filos and El Sauzal gold mines in Mexico; Marlin gold/silver mine in Guatemala; Alumbrera gold/copper mine in Argentina; and Marigold and Wharf gold mines in the United States.
2) Yamana Gold, Inc. (AUY)
Yamana Gold, Inc. has a Current Ratio of 2.89, a Quick Ratio of 2.44, and a 1-Year Projected Earnings Per Share Growth Rate of 32.08%. The short interest was 0.69% as of 08/12/2012. Yamana Gold Inc. engages in the exploration, development, and production of mineral properties, primarily gold. It also explores for copper, molybdenum, zinc, and silver metals. The company's property portfolio includes seven operating gold mines, including Chapada mine, Jacobina mining complex, and Fazenda Brasileiro mine in Brazil; El Pen mine and Minera Florida mine in Chile; Gualcamayo mine in Argentina; and Mercedes mine in Mexico.
3) Regeneron Pharmaceuticals, Inc. (REGN)
Regeneron Pharmaceuticals, Inc. has a Current Ratio of 4.20, a Quick Ratio of 4.06, and a 1-Year Projected Earnings Per Share Growth Rate of 53.79%. The short interest was 6.75% as of 08/12/2012. Regeneron Pharmaceuticals, Inc., a biopharmaceutical company, discovers, develops, and commercializes medicines for the treatment of serious medical conditions in the United States. The company's commercial products include EYLEA (aflibercept) Injection for the treatment of neovascular age-related macular degeneration; and ARCALYST (rilonacept) injection for subcutaneous use for the treatment of cryopyrin-associated periodic syndromes, including familial cold auto-inflammatory syndrome and muckle-wells syndrome in adults and children. Its products under Phase III clinical development stage consists of EYLEA for the treatment of serious eye diseases; ZALTRAP (Aflibercept), which is developed in oncology; and ARCALYST for the prevention of gout flares in patients initiating uric acid-lowering treatment.
4) Edwards Lifesciences Corp. (EW)
|Industry:||Medical Appliances & Equipment|
Edwards Lifesciences Corp. has a Current Ratio of 4.50, a Quick Ratio of 3.56, and a 1-Year Projected Earnings Per Share Growth Rate of 29.06%. The short interest was 2.78% as of 08/12/2012. Edwards Lifesciences Corporation provides products and technologies to treat advanced cardiovascular diseases or critically ill patients worldwide. The company offers heart valve therapy products, including tissue heart valves and repair products, which are used to replace or repair a patient's diseased or defective heart valve; and produces pericardial and porcine valves from biologically inert animal tissue sewn onto proprietary wire form stents. It also provides critical care products comprising hemodynamic monitoring systems to measure a patient's heart function in surgical and intensive care settings; Swan-Ganz line of pulmonary artery catheters and PreSep continuous venous oximetry catheters for measuring central venous oxygen saturation; PediaSat oximetry catheters for children; VolumeView sensor-catheters; and FloTrac continuous cardiac output monitoring system, a minimally invasive cardiac monitoring technology for goal-directed fluid optimization. In addition, the company offers cardiac surgery system products, such as ThruPort minimal incision valve surgery platform that enables surgeons to perform intricate procedures through small incisions and tailor procedures; cannulae, which are used during cardiac surgery in venous drainage, aortic perfusion, venting, and cardioplegia delivery; embolic protection devices; and minimally invasive surgery products.
5) Teck Resources Limited (TCK)
|Industry:||Industrial Metals & Minerals|
Teck Resources Limited has a Current Ratio of 3.48, a Quick Ratio of 2.53, and a 1-Year Projected Earnings Per Share Growth Rate of 25.30%. The short interest was 1.00% as of 08/12/2012. Teck Resources Limited operates as a diversified mining, mineral processing, and metallurgical company. It is involved in exploring, developing, smelting, refining, safety, environmental protecting, product stewardship, recycling, and researching activities. The company offers zinc and lead concentrates, and copper and molybdenum concentrates; zinc and lead, and alloys in a range of compositions and shapes; specialty metals, such as germanium, indium, and cadmium; and precious metals, including refined silver and gold dore.
*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.