Sometimes a company hits upon an idea or product that seems to be an overnight sensation. But more often, these fast-growing companies have been working hard to build the business for years, laying a foundation that can handle growth once the right opportunity presents itself. With this in mind, we focused on mid-cap stocks that are set for significant growth in the next year, but have also chosen not to over utilize debt as a source of funding. When a company has kept the debt down, it allows it to keep growth going, rather than worrying about paying back what it owes. The list of mid-cap stocks below provides you with an initial place to start your research.
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 with its available capital. By using this ratio, investors can identify the amount of leverage utilized by a specific company and compare it with 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.
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. From here, we then looked for companies that have maintained a sound capital structure (D/E Ratio<.1). From here, we then looked for companies that operate with little to no long-term debt (Long Term D/E Ratio<.1). From here, we then looked for companies 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 can offer attractive returns? Use our screened list as a starting point for your own analysis.
1) Ctrip.com International Ltd. (NASDAQ:CTRP)
|Long Term Debt/Equity Ratio||0.00|
|1-Year Projected Earnings Per Share Growth Rate||25.68%|
Ctrip.com International, Ltd., together with its subsidiaries, provides travel services for hotel accommodations, airline tickets, and packaged tours in the People's Republic of China. It also offers independent leisure travelers bundled package-tour products, including group tours, semi-group tours, and private tours or packaged tours with various transportation arrangements, such as cruise, bus, or self-driving. In addition, the company provides integrated transportation and accommodation services; and various value-added services consisting of car rental, insurance, visa services, tour guides, transportation at destinations, and tickets. Further, it offers Internet-related advertising, aviation casualty insurance, and air-ticket delivery services. Ctrip.com International, Ltd. was founded in 1999 and its headquarters is in Shanghai, the People's Republic of China.
2) NVR Inc. (NYSE:NVR)
|Long Term Debt/Equity Ratio||0.00|
|1-Year Projected Earnings Per Share Growth Rate||46.53%|
NVR, Inc. operates as a homebuilder in the United States. It engages in the construction and sale of single-family detached homes, town homes, and condominium buildings under the trade names of Ryan Homes, NVHomes, Fox Ridge Homes, and Rymarc Homes primarily to first-time homeowners and first-time move-up buyers. The company markets its products in Maryland, Virginia, West Virginia, western and eastern Pennsylvania, New York, North Carolina, South Carolina, Ohio, New Jersey, Delaware, Indiana, Kentucky, Florida, Tennessee, and Columbia. It also offers mortgage banking services to its homebuilding customers, including mortgage financing and brokerage of title insurance, as well as performs title searches in connection with mortgage loan closings. NVR, Inc. was founded in 1979 and its headquarters is in Reston, Virginia.
3) Zynga, Inc. (NASDAQ:ZNGA)
|Industry||Internet Information Providers|
|Long Term Debt/Equity Ratio||0.05|
|1-Year Projected Earnings Per Share Growth Rate||57.14%|
Zynga Inc. develops, markets, and operates online social games as live services on the Internet, social networking sites, and mobile platforms. The company offers its online social games under the CityVille, Zynga Poker, FarmVille, CastleVille, FrontierVille, Mafia Wars, Words with Friends, Hidden Chronicles, Zynga Bingo, Scramble With Friends, Slingo, and Dream Heights names. Its games are available on various platforms, including Facebook and other social networks, as well as mobile platforms, such as Apple iOS and Google Android worldwide. The company was formerly known as Zynga Game Network Inc. and changed its name to Zynga Inc. in November 2010. Zynga Inc. was founded in 2007 and its headquarters is in San Francisco, California.
4) IAC/InterActiveCorp. (IACI)
|Industry||Catalog & Mail Order Houses|
|Long Term Debt/Equity Ratio||0.04|
|1-Year Projected Earnings Per Share Growth Rate||25.89%|
IAC/InterActiveCorp engages in the Internet business in the United States and internationally. The company's Search segment develops, markets, and distributes various downloadable toolbars; provides search, reference, and content services through its destination search and other Websites, including Ask.com and Dictionary.com; and aggregates and integrates local advertising and content for distribution to publishers on Web and mobile platforms, as well as markets and distributes mobile applications through which it provides search and additional services.
Its Match segment offers subscription-based and advertiser-supported online personal services through its Websites comprising Match.com, Chemistry.com, OurTime.com, BlackPeopleMeet.com, and OkCupid.com, as well as through mobile applications and Meetic-branded Websites.
The company's ServiceMagic segment offers Market Match service that matches consumers with service professionals; Exact Match service, which enables consumers to review service professional profiles and select the service professional that meets their specific needs; and 1800Contractor.com, an online directory of service professionals. The company was formerly known as InterActiveCorp and changed its name to IAC/InterActiveCorp in July 2004. IAC/InterActiveCorp was founded in 1986 and its headquarters is in New York, New York.
Company profiles were sourced from Google Finance and Yahoo Finance. Financial data was sourced from Finviz on 08/30/2012.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
Business relationship disclosure: This article was prepared for ZetaKap Media by one of our full-time analysts. We did not receive compensation for this article (other than from Seeking Alpha), and we have no business relationship with any company whose stock is mentioned in this article.