By the time a company makes it to the mid cap level, it has enough experience to know there will be peaks and valleys in terms of sales and profits. The more successful companies have built this into the equation and most likely have been conserving cash all along to build up a reserve. After all, when a company has a high level of liquidity, it can provide a cushion to carry a company over the rough patches or be a source of funds for growth enhancing activities. For our list today, we found mid-cap stocks in the basic materials sector that are maintaining great liquidity. In addition, they have received recent "Buy" or better ratings from industry analysts. See the information below to learn more about our findings.
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).
We first looked for mid cap basic materials stocks. We then looked for companies with a large amount of cash on hand (Current Ratio>2)(Quick Ratio>2). From here, we then looked for companies that analysts rate as "Buy" or "Strong Buy" (1 < mean recommendation < 3).
Do you think these mid-cap stocks should be trading higher? Use our list along with your own analysis.
1) Eastman Chemical Co. (EMN)
|Industry||Chemicals - Major Diversified|
Eastman Chemical Company, a chemical company, engages in the manufacture and sale of chemicals, plastics, and fibers in the United States and internationally. The company operates in four segments: Coatings, Adhesives, Specialty Polymers, and Inks (CASPI); Fibers; Performance Chemicals and Intermediates (PCI); and Specialty Plastics. Its products include specialized copolyesters and cellulosic plastics, which are used in appliances, store fixtures and displays, building and construction, electronic packaging, medical packaging, personal care and cosmetics, performance films, tape and labels, fiber, photographic and optical film, graphic arts, and general packaging. The company was founded in 1920 and is headquartered in Kingsport, Tennessee.
2) Albemarle Corp. (ALB)
Albemarle Corporation develops, manufactures, and markets engineered specialty chemicals. The company's Polymer Solutions segment provides brominated, mineral, and phosphorus based flame retardants used in plastic enclosures for consumer electronics, printed circuit boards, wire and cable, electrical connectors, textiles, foam insulation, and foam seating in furniture and automobiles; and plastic and other additives, such as curatives, antioxidants, and stabilizers.
Its Catalysts segment offers refinery catalysts, including hydroprocessing catalysts, fluidized catalytic cracking catalysts, and additives; organometallic co-catalysts, and metallocene components and co-catalysts for the manufacture of commodity and specialty plastics used in packaging, non-packaging, films, and injection molding; electronic materials, such as high purity metal organic products used in the production of light emitting diodes, as well as other products used in the production of solar cells; and chemical catalysts used in the production of ethylene dichloride and methylamines.
The company's Fine Chemistry segment provides elemental bromine, alkyl bromides, inorganic bromides, brominated powdered activated carbon, and bromine fine chemicals used in chemical synthesis, oil and gas well drilling and completion fluids, mercury control, paper manufacturing, water purification, and beef and poultry processing. This segment also offers tertiary amines for surfactants, biocides, disinfectants, and sanitizers; potassium-based products for industrial applications; alkenyl succinic anhydride used in paper-sizing formulations; and aluminum oxides used in various refractory, ceramic, and polishing applications. In addition, it supplies fine chemistry products and performance chemicals for pharmaceutical and agricultural use, as well as provides custom manufacturing, research, and chemical scale-up services for companies. Albemarle Corporation was founded in 1993 and is based in Baton Rouge, Louisiana.
3) Precision Drilling Corporation (PDS)
|Industry||Oil & Gas Equipment & Services|
Precision Drilling Corporation provides contract drilling, and completion and production services to oil and natural gas exploration and production companies. Its Contract Drilling Services segment offers land drilling, directional drilling, and turnkey drilling services; trucking services for the movement of precision rigs; and procures and distributes oilfield supplies, as well as manufactures and refurbishes drilling and service rig equipments.
As of December 31, 2011, this segment operated 188 land drilling rigs in Canada, 143 land drilling rigs in the United States, 3 land drilling rigs in Saudi Arabia, 2 land drilling rigs in Mexico, and 1 land drilling rig in Colombia. The company's Completion and Production Services segment offers service rigs for well completion and workover services; snubbing services; camp and catering services; and wastewater treatment services, as well as is involved in the rental of oilfield surface equipment, tubulars, well control equipment, wellsite accommodations, and drilling camps. As of December 31, 2011, this segment operated 189 well completion and workover service rigs and 17 snubbing units in Canada; 1 snubbing unit in the United States; 232 wellsite accommodation units in Canada; 28 wellsite accommodation units in the United States; 86 small-flow wastewater treatment units, 4 large-flow wastewater treatment units, and 3 potable water production units in Canada; 56 drilling camps and 2 base camps in Canada; and 4 drilling camps in the United States, as well as provided approximately 11,100 oilfield rental items, including well control equipment, surface equipment and specialty tubulars in Canada. Precision Drilling Corporation was founded in 1951 and is headquartered in Calgary, Canada.
4) Cheniere Energy, Inc. (LNG)
|Industry||Oil & Gas Drilling & Exploration|
Cheniere Energy, Inc., an energy company, engages in liquefied natural gas related businesses. It owns and operates terminal projects, including Sabine Pass LNG in western Cameron Parish, Louisiana on the Sabine Pass Channel; and Creole Trail LNG at the mouth of the Calcasieu Channel in central Cameron Parish, Louisiana. The company also develops Corpus Christi LNG terminal near Corpus Christi, Texas; and natural gas pipelines to provide access to North American natural gas markets for customers of its LNG terminals. In addition, it is involved in LNG and natural gas marketing activities. Cheniere Energy, Inc. was founded in 1983 and is based in Houston, Texas.
*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.