6 'Strong Buy' Small-Cap Stocks Flush With Cash Reserves

by: ZetaKap

Being in the know often means taking in a lot of information and sifting through it carefully. The same came be true for looking at stock options. There are many choices, but finding ones that add value to your portfolio takes time and discernment. Today we have a list of stocks that speak to the investor who likes growth opportunities. We ran a scan to find small-cap stocks with a high level of liquidity. When a company has an ample supply of cash on hand it keeps the doors open for growth. In addition, all of the small-cap stocks in our list today have a recent analyst rating of 'Strong Buy'. We think you will find our list worthy of a second look.

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).

We first looked for small cap stocks. Next, we then screened for businesses that analysts rate as "Strong Buy" (mean recommendation < 2). We next screened for businesses that have a substantial amount of cash on hand (Current Ratio>2)(Quick Ratio>2). We did not screen out any sectors.

Do you think these small-cap stocks will break through to new highs? Use our list along with your own analysis.

1) Nutrisystem, Inc. (NASDAQ:NTRI)

Sector Services
Industry Consumer Services
Market Cap $308.73M
Beta 0.70

NTRI stock chart


Analysts' Rating 1.50
Current Ratio 2.50
Quick Ratio 2.00
Short Interest 16.84%

Nutrisystem, Inc. provides weight management products and services in the United States. The company offers nutritionally balanced weight loss programs designed for women, men, and seniors. Its Nutrisystem program consists of approximately 130 portion-controlled items that serve as the foundation of a low Glycemic Index diet.

2) Orbital Sciences Corp. (ORB)

Sector Industrial Goods
Industry Aerospace/Defense Products & Services
Market Cap $814.02M
Beta 1.12

ORB stock chart


Analysts' Rating 1.50
Current Ratio 2.30
Quick Ratio 2.13
Short Interest 3.85%

Orbital Sciences Corporation develops and manufactures small and medium-class rockets and space systems for commercial, military, and civil government customers. The company operates in three segments: Launch Vehicles, Satellites and Space Systems, and Advanced Space Programs. The Launch Vehicles segment develops and produces small-class launch vehicles that place satellites into low-Earth orbit; interceptor launch vehicles for missile defense systems, including interceptor boosters; and target launch vehicles, such as suborbital rockets and their principal subsystems, as well as payloads carried by vehicles used in the development and testing of missile defense systems.

The company's Satellites and Space Systems segment develops and produces communications satellites that provide cable and direct-to-home television distribution, business data network connectivity, regional mobile telephony, and other space-based communications services; and science and remote sensing satellites that are used to conduct space-related scientific research, collect imagery and other remotely-sensed data about the Earth, carry out interplanetary and other deep-space exploration missions, and demonstrate new space technologies.

3) Endologix Inc. (NASDAQ:ELGX)

Sector Healthcare
Industry Medical Instruments & Supplies
Market Cap $801.98M
Beta 1.16

ELGX stock chart


Analysts' Rating 1.50
Current Ratio 6.79
Quick Ratio 5.31
Short Interest 6.99%

Endologix, Inc. develops, manufactures, markets, and sells medical devices for the treatment of aortic disorders. It offers the ELG System, a stent graft and delivery system for the treatment of abdominal aortic aneurysms through minimally-invasive endovascular repair. The company also provides aortic extensions and limb extensions, which attach to the main body of ELG Device, enabling physicians to customize it to fit the patient's anatomy.

4) Kaiser Aluminum Corporation (NASDAQ:KALU)

Sector Basic Materials
Industry Aluminum
Market Cap $1.11B
Beta 1.28

KALU stock chart


Analysts' Rating 1.50
Current Ratio 4.45
Quick Ratio 3.24
Short Interest 9.55%

Kaiser Aluminum Corporation, together with its subsidiaries, engages in the production and sale of semi-fabricated specialty aluminum products. The company produces rolled, extruded, and drawn aluminum products used principally for aerospace and defense, automotive, consumer durables, electronics, electrical, and machinery and equipment end market applications. Its aerospace and high strength products include heat treat plates and sheets, cold finish bars, seamless drawn tubes, hard alloy extrusions, and billets; and general engineering products consist primarily of alloy rod, bar, tube, wire, sheet, plate, and standard extrusions.

5) RDA Microelectronics, Inc. (NASDAQ:RDA)

Sector Technology
Industry Semiconductor Equipment & Materials
Market Cap $409.74M
Beta -

RDA stock chart


Analysts' Rating 1.50
Current Ratio 2.90
Quick Ratio 2.34
Short Interest 3.69%

RDA Microelectronics, Inc., a fabless semiconductor company, designs, develops and markets radio-frequency and mixed-signal wireless SoC semiconductors. The company's product portfolio includes power amplifiers, transceivers and front-end modules, Baseband, Bluetooth system-on-chip, Wi-Fi, Bluetooth and FM combo chips, FM radio receivers, set-top box tuners, analog mobile television receivers, CMMB mobile television receivers, walkie-talkie transceivers, and LNB satellite down converters. Its products are incorporated into mobile handsets, set-top boxes, MP3 players, and other wireless and consumer electronic devices.

6) Procera Networks, Inc. (NYSEMKT:PKT)

Sector Technology
Industry Business Software & Services
Market Cap $437.70M
Beta 1.47

PKT stock chart


Analysts' Rating 1.50
Current Ratio 12.04
Quick Ratio 11.50
Short Interest 13.35%

Procera Networks, Inc. provides intelligent policy enforcement solutions based on deep packet inspection technology that enable mobile and broadband network operators and entities to manage private networks. Its products comprise PacketLogic Subscriber Manager that integrates PacketLogic with network management and operation systems, as well as enables policy enforcement, per-user tracking, and knowledge of where the user connects in the network; PacketLogic Intelligence Center, which provides the visualization of the application and subscriber intelligence gathered by deployed PacketLogic systems; and PacketLogic Real-Time Enforcement Platform that utilizes multiple hardware platforms, which run the same operating software. The company offers its products under the PacketLogic brand name.

*Company profiles were sourced from Google Finance and Yahoo Finance. Financial data was sourced from Finviz on 08/20/2012.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

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