On a personal finance level, when you have money in different accounts that are earning income and you have little unpaid debt, it creates a sense of possibility. Your money is working for you and precious resources are not focused on strategies to minimize expenses to be able to pay off debt. The same is true in business. Companies thrive when they have flush reserves and minimal debt. Today we developed a list of basic materials stocks that are liquid as well as minimal long term debt. We think these attributes position a company for growth or staying strong in times of uncertainty. Take a look at the list below to see if any of the stocks below are of interest to you.
The Debt/Equity Ratio illustrates how aggressively a company is financing its growth via debt. The more debt financing that is used in a capital structure, the more volatile earnings can become due to the additional interest expense. Should a company's potentially enhanced earnings fail to exceed the cost associated with debt financing over time, this can lead the company toward substantial trouble.
The Long Term Debt/Equity Ratio is a variation of the traditional debt-to-equity ratio; this value computes the proportion of a company's long-term debt compared to its available capital. By using this ratio, investors can identify the amount of leverage utilized by a specific company and compare it to others to help analyze the company's risk exposure. Generally, companies that finance a greater portion of their capital via debt are considered riskier than those with lower leverage ratios.
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 basic materials stocks. We then screened for businesses that have maintained a sound capital structure (D/E Ratio<.1). Next, we then screened for businesses that have maintained a sound long term capital structure (Long Term D/E Ratio<.1). We then looked for companies with a large amount of cash on hand (Current Ratio>2)(Quick Ratio>2). We did not screen out any market caps.
Do you think these stocks will go up in valuation? Use our screened list as a starting point for your own analysis.
1) Tanzanian Royalty Exploration Corp. (TRX)
|Long Term Debt/Equity Ratio||0.04|
Tanzanian Royalty Exploration Corporation, an exploration stage company, engages in the acquisition, financing, exploration, and development of mineral properties. The company primarily explores for gold or other precious metals. It holds a 55% interest in the Buckreef Project located in Tanzania. The company was formerly known as Tan Range Exploration Corporation and changed its name to Tanzanian Royalty Exploration Corporation in February 2006. Tanzanian Royalty Exploration Corporation was founded in 1990 and is based in South Surrey, Canada.
2) China Green Agriculture, Inc. (CGA)
|Long Term Debt/Equity Ratio||0.00|
China Green Agriculture, Inc., through its subsidiaries, engages in the research, development, production, and sale of various types of fertilizers and agricultural products in the People's Republic of China. Its fertilizer products include humic acid-based compound fertilizers, compound fertilizers, blended fertilizers, organic compound fertilizers, slow-release fertilizers, water-soluble fertilizers, and mixed organic-inorganic compound fertilizers. The company markets its fertilizer products to private wholesalers and retailers of agricultural farm products in 22 provinces, 4 autonomous regions, and 3 central government-controlled municipalities. It also engages in the development, production, and distribution of agricultural products, such as fruits, vegetables, flowers, and colored seedlings. The company sells its decorative flowers to flower shops, luxury hotels, and government agencies; fruits and vegetables to supermarkets and upscale restaurants; and seedlings to city planning departments in Shaanxi and its neighboring provinces. China Green Agriculture, Inc. is based in Xian, the People's Republic of China.
3) Richmont Mines Inc. (RIC)
|Long Term Debt/Equity Ratio||0.09|
Richmont Mines Inc. engages in the acquisition, exploration, development, and operation of mineral properties, principally gold in Canada. It operates the Beaufor Mine in Quebec and the Island Gold Mine in Ontario, as well as engages in the development of the Francoeur Mine in Quebec. The company's exploration properties include Louvem 117, Norex, Arncoeur, Lac Fortune, The Chimo Group, Monique, Camflo North West, and Wasamac in Quebec; and Sewell and Cripple Creek in Ontario. It also operates the Camflo Mill in Quebec. The company was formerly known as Ressources Minires Rouyn Inc. and changed its name to Richmont Mines Inc. in June 1991. Richmont Mines Inc. was founded in 1981 and is headquartered in Rouyn-Noranda, Canada.
4) Hallador Energy Company (HNRG)
|Industry||Nonmetallic Mineral Mining|
|Long Term Debt/Equity Ratio||0.00|
Hallador Energy Company, through its subsidiary, Sunrise Coal, LLC, engages in the production and sale of steam coal to the electric power generation industry in the United States. It owns interests in the Carlisle mine, an underground coal mine located in western Indiana. The company also owns a 45% equity interest in Savoy Energy, L.P., an oil and gas company with operations in Michigan; and a 50% interest in Sunrise Energy LLC, which engages in natural gas operations. As of December 31, 2011, it had approximately 46 million tons of proven and probable reserves. The company was formerly known as Hallador Petroleum Company and changed its name to Hallador Energy Company in December 2009. Hallador Energy Company was founded in 1949 and is based in Denver, Colorado.
5) Solazyme, Inc. (SZYM)
|Industry||Chemicals - Major Diversified|
|Long Term Debt/Equity Ratio||0.04|
Solazyme, Inc. engages in the production of renewable oil with a focus on chemicals and fuels, nutrition, and skin and personal care markets. The company's proprietary technology transforms a range of plant-based sugars into oils. Its renewable products could replace or enhance oils derived from petroleum, plants, and animal fats. The company's industrial biotechnology platform harnesses the prolific oil-producing capability of microalgae. Its biotechnology platform also helps in the production of bioproducts, which are made from the protein, fiber, and other compounds produced by microalgae. Solazyme, Inc. utilizes industrial fermentation equipment to scale and accelerate microalgae's natural oil production time to a few days. It focuses on selling renewable oil as drop-in replacements for marine, motor vehicle, and jet fuels, as well as replacements for chemicals that are traditionally derived from petroleum or other conventional oils. The company also develops microalgae-based food ingredients, including oils and powders that enhance the nutritional profile and functionality of food products; and a portfolio of microalgae-based products, such as Alguronic Acid for skin care. In addition, it offers Algenist, which is an anti-aging skincare product; and develops algal oils as replacements for the essential oils used in skin and personal care products. The company was founded in 2003 and is headquartered in South San Francisco, California.
*Company profiles were sourced from Google Finance and Yahoo Finance. Financial data was sourced from Finviz on 08/28/2012.