When you want to do something big in life, it usually requires research, developing a strategy, engaging others, and most of all, money to make it happen. So when a company wants to grow its business, we know it takes resources. Today we ran a screen of consumer stocks with EPS growth rates above 25% in the coming year. From there, we reduced the list to only include companies with sizeable cash reserves. Liquidity is key in helping companies achieve their growth projections. If stocks of this nature interest you, then you will like our list below.
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 the company is 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 consumer stocks. We then screened for businesses with a large amount of cash on hand (Current Ratio>2)(Quick Ratio>2). We then screened for businesses that have high future earnings per share growth forecasts (1-year projected EPS Growth Rate>25%). We did not screen out any market caps.
Do you think these stocks are undervalued? Use our list to help with your own analysis.
1) STR Holdings, Inc. (STRI)
|Industry||Rubber & Plastics|
|1-Year Projected Earnings Per Share Growth Rate||275.00%|
STR Holdings, Inc., together with its subsidiaries, designs, develops, manufactures, and sells encapsulants for the solar industry worldwide. Its encapsulants protect the embedded semiconductor circuits of solar panels. The company sells its products to crystalline silicon and thin-film solar module manufacturers. STR Holdings, Inc. was founded in 1944 and is headquartered in Enfield, Connecticut.
2) Steinway Musical Instruments Inc. (LVB)
|Industry||Recreational Goods, Other|
|1-Year Projected Earnings Per Share Growth Rate||33.33%|
Steinway Musical Instruments, Inc., through its subsidiaries, engages in the design, manufacture, marketing, and distribution of musical instruments. The company operates in two segments, Pianos, and Band and Orchestral Instruments. The Pianos segment offers pianos under Steinway & Sons, Boston, and Essex brands; and engages in online music business. It sells its products to professional artists and amateur pianists, as well as institutions, including concert halls, universities, music schools, houses of worship, hotels, and retirement homes through independent dealers and distributors in the United States, Germany, Austria, France, Switzerland, Belgium.
The Band and Orchestral Instruments segment manufactures and sells piccolos, flutes, clarinets, oboes, bassoons, trumpets, French horns, tubas, and trombones, as well as intermediate and professional level woodwind and brass instruments under Bach, Selmer, Selmer Paris, C.G. Conn, Leblanc, King, Armstrong, Holton, Yanagisawa, Vito, Emerson, Avanti, Noblet, and Benge brands. This segment also provides acoustical and tuned percussion instruments, including outfit drums, marching drums, concert drums, marimbas, xylophones, vibraphones, orchestra bells, and chimes under Ludwig and Musser brands; and distribute violins, violas, cellos, and basses under Glaesel, Scherl & Roth, and William Lewis & Son brands.
In addition, it manufactures mouthpieces and distributes accessories, such as music stands, batons, mallets, straps, mutes, reeds, pads, chin rests, strings, bows, cases and instrument care products. This segment sells its products to students, amateur and professional musicians, and institutions through independent musical instrument dealers and distributors in the United States, Europe, Latin America, and Asia. The company, formerly known as Selmer Industries, Inc., was founded in 1993 and is headquartered in Waltham, Massachusetts.
3) Douglas Dynamics, Inc. (PLOW)
|1-Year Projected Earnings Per Share Growth Rate||43.33%|
Douglas Dynamics, Inc. designs, manufactures, and sells snow and ice control equipment for light trucks in the United States and Canada. It products include snowplows, sand and salt spreaders, and related parts and accessories. The company sells its products under the WESTERN, FISHER, and BLIZZARD brands through a distributor network primarily to professional snowplowers who are contracted to remove snow and ice from commercial, municipal, and residential areas. Douglas Dynamics, Inc. was founded in 1948 and is headquartered in Milwaukee, Wisconsin.
*Company profiles were sourced from Google Finance and Yahoo Finance. Financial data was sourced from Finviz on 08/31/2012.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.