When you want to round out your investment portfolio with some strong stocks that have reliable performance, there are plenty of options in the large cap category. To find companies that stand out from the rest, we focused on two attributes that demonstrate fiscal health: liquidity and minimal debt. This combination points to companies that have significant advantages when it comes to both weathering economic downturns or making strategic acquisitions to further growth. We think you will enjoy reviewing the summaries and graphs below to see if any of these large cap stocks appeal to you.
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).
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 to its available capital. By using this ratio, investors can identify the amount of leverage utilized by a specific company and compare it to 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.
We first looked for large cap stocks. From here, we then looked for companies that have strong liquidity (Current Ratio>2)(Quick Ratio>2). We then screened for businesses that operate with little to no debt (D/E Ratio<.1). We then screened for businesses that have maintained a sound long term capital structure (Long Term D/E Ratio<.1). We did not screen out any sectors.
Do you think these large-cap stocks are undervalued? Use our list along with your own analysis.
1) Nike, Inc. (NKE)
|Industry||Textile - Apparel Footwear & Accessories|
|Long Term Debt/Equity Ratio||0.02|
NIKE, Inc., together with its subsidiaries, engages in the design, development, marketing, and sale of footwear, apparel, equipment, and accessories for men, women, and children worldwide. The company offers products in seven categories, including running, basketball, football, men's training, women's training, NIKE sportswear, and action sports. It also markets products designed for kids, as well as for other athletic and recreational uses, such as baseball, cricket, golf, lacrosse, outdoor activities, football, tennis, volleyball, walking, and wrestling.
In addition, the company sells sports apparel and accessories, and athletic bags and accessory items, as well as markets apparel with licensed college and professional team and league logos. Further, it sells a range of performance equipment, including bags, socks, sport balls, eyewear, timepieces, digital devices, bats, gloves, protective equipment, golf clubs, and other equipment for sports activities under the NIKE Brand name; and various plastic products to other manufacturers. Additionally, the company has license agreements that enable unaffiliated parties to manufacture and sell apparel, digital devices, and applications and other equipment designed for sports activities.
It also designs, distributes, and licenses athletic and casual footwear, apparel and accessories under the Converse, Chuck Taylor, All Star, One Star, Star Chevron, and Jack Purcell trademarks; and designs and distributes various action sports and youth lifestyle apparel and accessories under the Hurley trademark. The company sells its products through its retail stores and Internet sales, as well as independent distributors, licensees, and sales representatives. NIKE, Inc. was founded in 1964 and is headquartered in Beaverton, Oregon.
2) Goldcorp Inc. (GG)
|Long Term Debt/Equity Ratio||0.03|
Goldcorp Inc. engages in the acquisition, development, exploration, and operation of precious metal properties. It primarily explores gold, silver, copper, lead, and zinc. The company's principal mining properties include Red Lake, Porcupine, and Musselwhite gold mines in Canada; Peasquito gold/silver/lead/zinc mine, and Los Filos and El Sauzal gold mines in Mexico; Marlin gold/silver mine in Guatemala; Alumbrera gold/copper mine in Argentina; and Marigold and Wharf gold mines in the United States. Goldcorp Inc. was founded in 1954 and is headquartered in Vancouver, Canada.
3) Check Point Software Technologies Ltd. (CHKP)
|Industry||Security Software & Services|
|Long Term Debt/Equity Ratio||0.00|
Check Point Software Technologies Ltd. develops, markets, and supports a range of software, and combined hardware and software products and services for information technology security worldwide. It offers network and gateway security solutions that enable its customers to implement their security policies on network traffic between internal networks and the Internet, as well as between internal networks and private networks that are shared with partners; endpoint security solutions, which provide various software blades that run on individual computers connected to the network, such as desktop computers, laptop computers, and other mobile devices; and security management solutions to ensure consistent operations in accordance with an enterprise's security policy.
The company also offers technical services comprising technical customer support programs and plans, such as enterprise based support and collaborative enterprise support; certification and educational training on the checkpoint's products; and professional services in implementing, upgrading, and optimizing checkpoint's products, including design planning, security implementation, and project management services. In addition, it provides ZoneAlarm solutions that protect consumers from hackers, spyware, and identity theft. The company sells its products and services through a network of channel partners, including distributors, resellers, value-added resellers, system integrators, and managed services providers to enterprises, service providers, small and medium sized businesses, and consumers. Check Point Software Technologies Ltd. was founded in 1993 and is headquartered in Tel Aviv, Israel.
4) Kyocera Corp. (KYO)
|Long Term Debt/Equity Ratio||0.01|
Kyocera Corporation manufactures, distributes, and sells industrial components, and telecommunications and information equipment to worldwide. The company offers fine ceramic components for semiconductor processing and LCD manufacturing equipment; information and telecommunication, automotive, and general industrial ceramic components; and sapphire substrates, as well as ceramic packages for crystal and SAW devices; CMOS/CCD image sensors and LSI ceramic packages; wireless communication and optical communication device packages, and components; and organic multilayer packages and substrates. It also provides applied ceramic products consisting of residential and industrial solar power generating systems, solar cells and modules, cutting tools, micro drills, medical and dental implants, and jewelry and fine ceramic application products; and electronic devices, including ceramic and tantalum capacitors, SAW devices, RF modules, EMI filters, clock oscillators, crystal units, ceramic resonators, optical low pass filters, connectors, thermal and inkjet print heads, amorphous silicon photoreceptor drums, liquid crystal displays, and touch panels.
In addition, the company offers mobile phone handsets and personal handy phone system related products; and information equipment consisting of ECOSYS printers and multifunctional peripherals, wide format multifunctional systems, printer and multifunction peripherals supplies, and managed printing services; and engages in realty development activities. Further, it provides information systems and telecommunication, engineering, and management consulting services; Epoxy molding compounds for semiconductor encapsulation; electrical insulators, flexible printed circuit sheet materials, synthetic resin molded parts, and LED lighting systems. The company was formerly known as Kyoto Ceramic Kabushiki Kaisha and changed its name to Kyocera Corporation in 1982. Kyocera Corporation was founded in 1959 and is headquartered in Kyoto, Japan.
5) Cerner Corporation (CERN)
|Industry||Healthcare Information Services|
|Long Term Debt/Equity Ratio||0.05|
Cerner Corporation designs, develops, markets, installs, hosts, and supports healthcare information technology, healthcare devices, and content solutions for healthcare organizations and consumers worldwide. It offers the Cerner Millennium architecture, which combines clinical, financial, and management information systems that provides access to an individual's electronic health record (EHR) at the point of care, and organizes and delivers information for physicians, nurses, laboratory technicians, pharmacists, front and back-office professionals, and consumers. The company also provides the Healthe Intent platform, a cloud-based platform that sits above existing EHR systems and is designed to contain data from any EHR along with claims data, medical evidence, and research to facilitate proactive care.
In addition, it offers a range of services, including implementation and training, remote hosting, operational management services, revenue cycle services, support and maintenance, healthcare data analysis, clinical process optimization, transaction processing, employer health centers, employee wellness programs, and third party administrator services for employer-based health plans. The company serves integrated delivery networks, physician groups and networks, managed care organizations, hospitals, medical centers, reference laboratories, home health agencies, blood banks, imaging centers, pharmacies, pharmaceutical manufacturers, employers, governments, and public health organizations. Cerner Corporation was founded in 1979 and is headquartered in North Kansas City, Missouri.
6) QUALCOMM Incorporated (QCOM)
|Long Term Debt/Equity Ratio||0.00|
QUALCOMM Incorporated designs, develops, manufactures, and markets digital telecommunications products and services. It operates in four segments: Qualcomm CDMA Technologies (QCT), Qualcomm Technology Licensing (QTL), Qualcomm Wireless and Internet (QWI), and Qualcomm Strategic Initiatives (QSI). The QCT segment develops and supplies integrated circuits and system software based on code division multiple access (CDMA), orthogonal frequency division multiple access (OFDMA), and other technologies for use in voice and data communications, networking, application processing, multimedia, and global positioning systems. The QTL segment grants licenses to use portions of its intellectual property portfolio, which includes patent rights useful in the manufacture and sale of certain wireless products, such as products implementing cdmaOne, CDMA2000, WCDMA, CDMA TDD (including TD-SCDMA), GSM/GPRS/EDGE, and/or OFDMA standards.
The QWI segment is involved in providing Qualcomm Internet Services, which offers content enablement services for the wireless industry, and push-to-talk and other products and services for wireless network operators; Qualcomm Government Technologies that provides development, hardware, and analytical services to the United States government agencies involving wireless communications technologies; Qualcomm Enterprise Services, which offers satellite and terrestrial-based two-way wireless information and position reporting services to transportation and logistics companies and other enterprise companies with fleet vehicles; and Firethorn that builds and manages software applications to enable mobile commerce services. The QSI segment invests in early-stage companies that support the design and introduction of new products and services, as well as holds spectrum licenses. The company operates primarily in China, South Korea, Taiwan, Japan, and the United States. QUALCOMM Incorporated was founded in 1985 and is headquartered in San Diego, California.
7) Chipotle Mexican Grill, Inc. (CMG)
|Long Term Debt/Equity Ratio||0.00|
Chipotle Mexican Grill, Inc. develops and operates fast-casual, fresh Mexican food restaurants in the United States, Canada, the United Kingdom, and France. Its restaurants primarily offer burritos, tacos, burrito bowls, and salads. As of June 30, 2012, it operated approximately 1,316 Chipotle restaurants. Chipotle Mexican Grill, Inc. was founded in 1993 and is based in Denver, Colorado.
*Company profiles were sourced from Google Finance and Yahoo Finance. Financial data was sourced from Finviz on 09/13/2012.