Many investors find the mid cap range to be just right for investment in growth opportunities. Here you do not have as much risk as small cap stocks, and there is still plenty of room for expansion. To find mid cap stocks that appear to be on the cusp of something bigger, we focused today on finding companies with substantial cash reserves and EPS growth projections above 25% for the next five years. The two traits pair together nicely. When a company is highly liquid, those cash reserves can be funneled into strategies that enhance growth. Take a look at the summaries below to see if any of these companies spark your curiosity.
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 five-year Expected EPS growth rate is a long-term 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 next screened for businesses that have strong liquidity (Current Ratio>2)(Quick Ratio>2). We then looked for businesses with projected high growth, measured by five-year projected EPS growth above 25%. We did not screen out any sectors.
Do you think these mid-cap stocks have higher to rise? Please use our list to assist with your own analysis.
1) Konami Corp. (KNM)
|Industry||Multimedia & Graphics Software|
|5-Year Projected Earnings Per Share Growth Rate||32.10%|
Konami Corporation develops, publishes, markets, and distributes video game software products for stationary and portable consoles, and personal computers worldwide. It operates in four segments: Digital Entertainment, Health and Fitness, Gaming and Systems, and Pachinko and Pachinko Slot Machines. The Digital Entertainment segment plans, produces, manufactures, and sells social content for social networks, content for mobile phones, online games, music and video package products, video game software, video games for amusement facilities, content for token-operated games, and card games, as well as electronic toys, figures, and character goods.
This segment also builds computer systems related to online games; maintains and operates online servers; and purchases and distributes video game software for home use. The Health and Fitness segment operates health and fitness clubs. As of March 31, 2012, this segment owned and operated 205 fitness clubs; and provided outsourced services at 161 clubs. The Gaming and Systems segment develops and sells content, hardware, and casino management systems for gaming machines for casinos. The Pachinko and Pachinko Slot Machines segment is involved in the production, manufacture, and sale of pachinko slot machines and liquid crystal displays for pachinko machines. In addition, Konami Corporation provides real estate management services; and operates portal sites. The company was formerly known as Konami Co., Ltd. and changed its name to Konami Corporation in 2000. Konami Corporation was founded in 1969 and is headquartered in Tokyo, Japan.
2) Cubist Pharmaceuticals Inc. (CBST)
|Industry||Drug Manufacturers - Other|
|5-Year Projected Earnings Per Share Growth Rate||30.53%|
Cubist Pharmaceuticals, Inc., a biopharmaceutical company, focuses on the research, development, and commercialization of pharmaceutical products that address unmet medical needs in the acute care environment. The company markets CUBICIN (daptomycin for injection), a once-daily, bactericidal, and intravenous antibiotic with activity against gram-positive organisms, including methicillin-resistant staphylococcus aureus; and ENTEREG, an alvimopan for acceleration of upper and lower gastrointestinal recovery. It also co-promotes DIFICIDTM used for the treatment of clostridium difficile-associated diarrhea in the United States. The company's clinical development product pipeline consists of CXA-201, which is in the Phase III clinical trial for patients with complicated urinary tract infections and complicated intra-abdominal infections.
It is also developing CXA-201 for the treatment of hospital-acquired bacterial pneumonia and ventilator-associated bacterial pneumonia. In addition, the company's products under development comprise CB-315, an oral, bactericidal lipopeptide with in vitro bactericidal activity against C. difficile, for the treatment of clostridium difficile-associated diarrhea (CDAD); and CB-5945, an oral, peripherally-restricted mu opioid receptor antagonist for the treatment of chronic OIC, as well as CB-625 for acute pain. Further, its pre-clinical programs include therapies to treat various bacterial infections and agents to treat acute pain. The company also has collaborations and agreements with third parties that are focused on the research and development of acute care products. Cubist Pharmaceuticals, Inc. was founded in 1992 and is headquartered in Lexington, Massachusetts.
3) BioMarin Pharmaceutical Inc. (BMRN)
|5-Year Projected Earnings Per Share Growth Rate||36.00%|
BioMarin Pharmaceutical Inc. develops and commercializes biopharmaceuticals for serious diseases and medical conditions in the United States, Europe, Latin America, and rest of the world. The company's commercial products include Naglazyme, a recombinant form of N-acetylgalactosamine 4-sulfatase enzyme used for the treatment of mucopolysaccharidosis (MPS) VI; Kuvan, a proprietary synthetic oral form of 6R-BH4 used to treat patients with phenylketonuria (PKU), a metabolic disease; Aldurazyme used for the treatment of mucopolysaccharidosis I, a genetic disease; and Firdapse used to treat Lambert Eaton Myasthenic Syndrome, an autoimmune disease.
It develops GALNS, an enzyme replacement therapy for the treatment of MPS IVA, a lysosomal storage disorder; PEG-PAL, an enzyme substitution therapy that is under Phase II clinical trial to treat PKU; BMN-673, a Phase I/II clinical trial product for the treatment of cancer; BMN-701, an enzyme replacement therapy, which is under Phase I/II clinical trials for Pompe disease, a glycogen storage disorder; and BMN-111, a peptide therapeutic that is under Phase I clinical trial for the treatment of achondroplasia.
The company sells its Naglazyme, Kuvan, and Firdapse products to specialty pharmacies and end-users, such as hospitals and foreign government agencies, which act as retailers; and Naglazyme products to distributors and pharmaceutical wholesalers. It has a collaboration agreement with Genzyme Corporation for the manufacture of Aldurazyme; and an agreement with Merck Serono S.A. for the further development and commercialization of Kuvan and other products containing 6R-BH4 and PEG-PAL for PKU. BioMarin Pharmaceutical Inc. was founded in 1996 and is headquartered in Novato, California.
*Company profiles were sourced from Google Finance and Yahoo Finance. Financial data was sourced from Finviz on August 25, 2012.