Cash on hand serves a company well in the current market. It provides a cushion for those unanticipated dry spells and funding for strategic growth opportunities like acquisitions. With this in mind, we searched for mid cap stocks that have a substantial cash reserve. In addition, these stocks have EPS growth rates above 25% for the coming year. When a company has a high level of liquidity it provides reassurance to investors that there is funding on hand to work towards achieving the projected growth. We think you will find the list of mid cap stocks we have summarized below worthy of a second look.
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).
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. We then looked for companies that have strong liquidity (Current Ratio>2)(Quick Ratio>2). We next 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 sectors.
Do you think these mid-cap stocks will go up in valuation? Use this list as a starting-off point for your own analysis.
1) Alkermes plc (NASDAQ:ALKS)
|1-Year Projected Earnings Per Share Growth Rate||27.69%|
Alkermes Public Limited Company, an integrated biopharmaceutical company, develops medicines that enhance patient outcomes. The company offers RISPERDAL CONSTA for schizophrenia and bipolar I disorder; INVEGA SUSTENNA for the treatment of schizophrenia; AMPYRA/ FAMPYRA for the treatment of multiple sclerosis; BYDUREON for the treatment of type II diabetes; VIVITROL for alcohol and opioid dependence; TRICOR, LIPANTHYL, LIPIDIL, and SUPRALIP to lower cholesterol; ZANAFLEX for muscle spasticity; AVINZA for severe pain; EMEND for the treatment of nausea associated with chemotherapy and surgery; and FOCALIN XR and RITALIN LA for attention deficit and hyperactivity disorder. Its products also include MEGACE ES for the treatment of cachexia associated with AIDS; LUVOX CR for obsessive-compulsive disorder; RAPAMUNE for the prevention of renal transplant rejection; NAPRELAN for various mild to moderate pain indications; VERAPAMIL SR, VERELAN, VERELAN PM, VERAPAMIL PM, VERECAPS, UNIVER, and AFE Ditab CR for hypertension; and DILZEM SR, DILZEM XL, DILTELAN, ACALIX CD, DINISOR, TILAZEM CR, and CARDIZEM CD for hypertension and/or angina. The company was founded in 1987 and is headquartered in Dublin, Ireland.
2) Juniper Networks, Inc. (NYSE:JNPR)
|Industry||Networking & Communication Devices|
|1-Year Projected Earnings Per Share Growth Rate||46.05%|
Juniper Networks, Inc. designs, develops, and sells products and services that provide network infrastructure for networking requirements of service providers, enterprises, governments, and research and public sector organizations worldwide. The company operates in two segments, Infrastructure and SLT. The Infrastructure segment primarily provides scalable routing and switching products that are used to control and direct network traffic. Its products include Internet protocol routing and carrier Ethernet routing portfolio, and Ethernet switching portfolio comprising T series, M series, PTX series, E Series, MX series, and EX series, as well as QFabric and WLAN products. The SLT segment offers solutions that protect the users, applications, and data on the network itself to provide network services across a distributed infrastructure.
This segment provides services gateways, integrated firewalls, and VPN solutions, which provide firewall/VPN performance and scalability and combines routing, switching, and security functionality; Junos Pulse mobile security suite and SA series SSL VPN appliances to provide secure access to corporate resources for remote and mobile users from any Web-enabled device; IDP series appliances that utilize intrusion detection methods to increase the detection rate of and prevent network attacks; and identity and policy control solutions to integrate subscriber privileges, application requirements, and business policies with the IP network infrastructure. The company sells its products and service through direct sales, as well as through distributors, value-added resellers, and original equipment manufacturer partners. Juniper Networks, Inc. was founded in 1996 and is headquartered in Sunnyvale, California.
3) Cepheid (NASDAQ:CPHD)
|Industry||Scientific & Technical Instruments|
|1-Year Projected Earnings Per Share Growth Rate||1200.00%|
Cepheid, a molecular diagnostics company, engages in developing, manufacturing, and marketing integrated systems for testing in the clinical market, as well as for application in legacy biothreat, industrial, and partner markets. Its systems enable molecular testing for organisms and genetic-based diseases by automation. The company offers GeneXpert system that integrates sample preparation in addition to DNA amplification and detection; and SmartCycler system, which integrates DNA amplification and detection to allow rapid analysis of a sample.
The GeneXpert system is designed for reference laboratories, hospital central laboratories, and satellite testing locations, such as emergency departments and intensive care units within hospitals and doctors' offices. Cepheid also provides GeneXpert Infinity System for high volume testing. The company offers tests for the GeneXpert and the SmartCycler systems in the areas of healthcare associated infections, critical infectious disease, genetics, women's health, and oncology. These tests include U.S. Food and Drug Administration (FDA) cleared products, CE marked products, analyte specific reagents, and research use only tests in the clinical market.
In the industrial market, it sells its SmartCycler system along with general use polymerase chain reaction reagents and reaction tubes. Cepheid sells its products its direct sales force and through third-party distributors worldwide. It has collaboration agreements with Novartis, Foundation for Innovative New Diagnostics, Life Technologies Corporation, and Northrop Grumman Corporation. The company was founded in 1996 and is headquartered in Sunnyvale, California.
*Company profiles were sourced from Google Finance and Yahoo Finance. Financial data was sourced from Finviz on 09/05/2012.
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.