You don't have to be an overly cautious person to favor investments with mid-cap stocks. Stocks at this level present significant growth opportunities without the risk associated with small caps. To find stocks with growth on the horizon, we ran a screen to find those with EPS growth rates above 25%. We then asked the logical question of whether these companies had cash reserves on hand to fund the expansion. Take a look at our findings to see if any of these stocks pique your interest.
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 mid cap stocks. We then screened for businesses with a large amount of cash on hand (Current Ratio>2)(Quick Ratio>2). We then looked 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 mid-cap stocks are undervalued and should be trading higher? Please use our list to assist with your own analysis.
1) Lam Research Corporation (LRCX)
|Industry||Semiconductor Equipment & Materials|
|1-Year Projected Earnings Per Share Growth Rate||66.14%|
Lam Research Corporation designs, manufactures, markets, refurbishes, and services semiconductor processing equipments used in the fabrication of integrated circuits. The company offers etch products that remove portions of various films from the wafer in the creation of semiconductor devices. Its etch products include dielectric etch, conductor etch, three-dimensional integrated circuit etch, MEMS devices, CMOS image sensors, and power devices for etching process.
2) Martin Marietta Materials Inc. (MLM)
|Industry||General Building Materials|
|1-Year Projected Earnings Per Share Growth Rate||38.86%|
Martin Marietta Materials, Inc., together with its subsidiaries, engages in the production and sale of aggregates for the construction industry primarily in the United States, Canada, the Bahamas, and the Caribbean Islands. It mines, processes, and sells granite, limestone, sand, gravel, and other aggregate products for use in the public infrastructure, and nonresidential and residential construction industries, as well as in the agriculture, railroad ballast, chemical, and other applications. The company also offers asphalt, ready mixed concrete, and road paving materials.
3) National Instruments Corporation (NATI)
|Industry||Technical & System Software|
|1-Year Projected Earnings Per Share Growth Rate||31.70%|
National Instruments Corporation designs, manufactures, and sells measurement and automation products to create virtual instrumentation systems for general, commercial, industrial, and scientific applications worldwide. The company sells or licenses application software and modular hardware that combines with industry-standard computers, networks, and third party devices to create measurement, automation, and embedded systems. Its system design software products include LabVIEW to design custom virtual instruments for scientists and engineers and provide data analysis, visualization, and sharing features; LabVIEW Real-Time and LabVIEW FPGA, which are modular software add-ons enabling users to configure their application programs and to build custom hardware devices for measurement or control protocols.
4) JDS Uniphase Corporation (JDSU)
|1-Year Projected Earnings Per Share Growth Rate||40.35%|
JDS Uniphase Corporation provides communications test and measurement solutions, and optical products for telecommunications service providers, wireless operators, cable operators, network-equipment manufacturers, and enterprises worldwide. The company's Communications Test and Measurement segment supplies instruments, software, and services to enable the design, deployment, and maintenance of communication equipment and networks. Its product portfolio consists of test tools, platforms, software, and services for wireless and fixed networks.
5) 3D Systems Corp. (DDD)
|1-Year Projected Earnings Per Share Growth Rate||25.50%|
3D Systems Corporation, through its subsidiaries, engages in the design, development, manufacture, marketing, and servicing of 3D printers and related products, print materials, and services. The company's principle print engines comprise stereolithography, selective laser sintering, multi-jet modeling, film transfer imaging, selective laser melting, and plastic jet printers. Its 3D printers convert data input from computer-aided design software or 3D scanning and sculpting devices to produce physical objects from engineered plastic, metal, and composite print materials. The company also blends, markets, sells, and distributes various consumables, engineered plastics, metal materials, and composites; and offers various software tools, as well as pre-sale and post-sale services, including applications development, installation, warranty, and maintenance.
6) Cameco Corp. (CCJ)
|Industry||Industrial Metals & Minerals|
|1-Year Projected Earnings Per Share Growth Rate||47.60%|
Cameco Corporation operates as a uranium producer, supplier of conversion services, and fuel manufacturer. The company's Uranium segment is involved in the exploration for, mining, milling, purchase, and sale of uranium concentrate. Its operating uranium properties include the McArthur River and Key Lake, and Rabbit Lake located in Saskatchewan, Canada; the Crow Butte located in Nebraska and the Smith Ranch-Highland located in Wyoming; and the Inkai uranium deposit located in Kazakhstan. Cameco Corporation's Fuel Services segment engages in the refining, conversion, and fabrication of uranium concentrate; and the purchase and sale of conversion services.
*Company profiles were sourced from Google Finance and Yahoo Finance. Financial data was sourced from Finviz on 08/19/2012.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.