With the prevalence of uncertainty in the current economy, it is understandable that investors seek opportunities that are not viewed as high risk. Stocks in the mid cap range can provide the best of both worlds. These stocks offer plenty of opportunity to grow and tend to have less exposure for investors than smaller companies. We ran a scan to find mid cap stocks with the crucial components that point to a company with financial stability: Strong profits and a high level of liquidity. Having cash reserves speaks to a firm's ability to seize growth opportunities as well as hold steady during downturns without having to scramble for more funding. Check out the list of mid cap stocks below to see if any capture your interest.
EPS growth (earnings per share growth) illustrates the growth of earnings per share over time. EPS growth rates help investors identify stocks that are increasing or decreasing in profitability. This profitability metric is generally a key driver in the price of the stock as it directly correlates to the profitability of the company as a whole.
Return on Assets [ROA] illustrates how much a company is generating in earnings from its assets alone. This metric gives investors a picture of how profitable the company is relative to the assets in current possession. As well, it lets investors see how efficient and effective management is at generating earnings from the company's assets. While most management teams can probably make money by throwing money at an issue, very few can make very large profits with little investment.
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 mid cap stocks. We next screened for businesses that have shown strong bottom line growth over the last year (1-year fiscal EPS growth rate>10%)(ROA > 10%). We then screened for businesses with a large amount of cash on hand (Current Ratio>2)(Quick Ratio>2). We did not screen out any sectors.
Do you think these mid-cap stocks hold solid value? Use our list to help with your own analysis.
1) DSW Inc. (NYSE:DSW)
|Earnings Per Share Growth Rate||803.37%|
|Return on Assets||11.68%|
DSW Inc. operates as a branded footwear and accessories specialty retailer in the United States. It offers fashion, dress, casual, and athletic footwear and accessories for women and men through its DSW stores and dsw.com. The company also provides kids' shoes on dsw.com. As of August 30, 2012, it operated 341 stores in 41 states; and 344 leased locations in the United States. The company was founded in 1917 and is based in Columbus, Ohio.
2) Valmont Industries, Inc. (NYSE:VMI)
|Earnings Per Share Growth Rate||140.74%|
|Return on Assets||11.53%|
Valmont Industries, Inc. produces and sells fabricated metal products, pole and tower structures, and mechanized irrigation systems in the United States and internationally. The company's Engineered Infrastructure Products segment offers steel and aluminum poles and structures, to which lighting and traffic control fixtures are attached for applications in streets, highways, parking lots, sports stadiums, and commercial and residential developments; and roadway safety systems, including guard rail barrier systems, wire rope safety barriers, and crash attenuation barriers to redirect vehicles and to prevent collisions between vehicles.
This segment also provides structures and components for the wireless communication market, as well as for the erection of infrastructure, industrial, and commercial access systems. Its Utility Support Structures segment offers tapered steel and pre-stressed concrete poles for high-voltage transmission lines, substations, and electrical distribution, as well as produces hybrid structures, which are structures with a concrete base section and steel upper sections.
The company's Coatings segment provides metal coating services, such as hot-dipped galvanizing, anodizing, powder coating, and e-coating. Its Irrigation segment offers mechanical irrigation equipment and related service parts under the Valley brand. The company also manufactures forged steel grinding media for the mining industry, tubular products for industrial customers, and electrolytic manganese dioxide for disposable batteries; and distributes industrial fasteners. It serves state and federal governments, contractors, utility and telecommunications companies, commercial lighting fixtures manufacturers, and large farms, as well as the general manufacturing sector. The company sells its products through direct sales force, independent and commissioned sales agents, and independent dealers. Valmont Industries, Inc. was founded in 1946 and is headquartered in Omaha, Nebraska.
3) Hubbell Inc. (NYSE:HUB.B)
|Earnings Per Share Growth Rate||23.19%|
|Return on Assets||10.39%|
Hubbell Incorporated engages in the design, manufacture, and sale of electrical and electronic products in the United States and internationally. The company operates in two segments, Electrical and Power. The Electrical segment provides standard and special application wiring device products, rough-in electrical products, connector and grounding products, lighting fixtures, and controls, as well as other electrical equipment for use in industrial, commercial, and institutional facilities by electrical contractors, maintenance personnel, electricians, and telecommunications companies. It also designs and manufactures various high voltage test and measurement equipment, industrial controls, and communication systems for use in the non-residential and industrial markets, as well as in the oil and gas, and mining industries.
This segment markets its products through electrical and industrial distributors, home centers, retail and hardware outlets, and lighting showrooms; special application products through wholesale distributors to contractors, industrial customers, and original equipment manufacturers; and lighting fixtures and controls, electrical wiring devices, rough-in electrical products, and high voltage products through sales agents. The Power segment engages in the design and manufacture of distribution, transmission, substation, and telecommunications products. This segment sells its products through distributors and direct sales to electric utilities, telecommunication companies, pipeline and mining operations, industrial firms, construction and engineering firms, and transportation industries. The company has its operations in the United States, Canada, Singapore, Switzerland, Puerto Rico, China, Mexico, Italy, the United Kingdom, Brazil, and Australia. Hubbell Incorporated was founded in 1888 and is based in Shelton, Connecticut.
4) Skyworks Solutions Inc. (NASDAQ:SWKS)
|Industry||Semiconductor - Integrated Circuits|
|Earnings Per Share Growth Rate||58.17%|
|Return on Assets||10.51%|
Skyworks Solutions, Inc., together with its subsidiaries, offers analog and mixed signal semiconductors worldwide. The company provides power amplifiers and front-end solutions for cellular handsets from entry level to multimedia platforms, as well as smartphones. Its product portfolio includes amplifiers, attenuators, circulators, detectors, diodes, directional couplers, front-end modules, hybrids, infrastructure RF subsystems, isolators, mixers/demodulators, optocouplers, optoisolators, phase shifters, PLLs/synthesizers/VCOs, power dividers/combiners, receivers, switches, and technical ceramics. The company also offers MIS silicon chip capacitors, transceivers, and modulators. It provides products for supporting automotive, broadband, cellular infrastructure, energy management, industrial, medical, military, and cellular handset applications. The company sells its products primarily through its direct sales force, as well as through independent manufacturers' representatives and distribution partners. Skyworks Solutions, Inc. was founded in 1962 and is headquartered in Woburn, Massachusetts.
*Company profiles were sourced from Google Finance and Yahoo Finance. Financial data was sourced from Finviz on 09/04/2012.