If growth opportunities are what capture your attention, then starting your search in the small cap arena makes sense. And when your scope is further narrowed to tech stocks, then the stakes for growth, as well as risk are increased. To up the protection, we ran a scan to find tech stocks with high liquidity and impressive projected EPS growth rates. These two traits pair well as the cash reserves can be accessed to fund the growth and the opportunities and challenges that may arise. If liquid small cap tech stocks that have growth on the horizon appeal to you then you will like our list below.
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.
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 small cap technology stocks. We next screened for businesses with estimated high-growth, with 1-year projected EPS growth above 25%. We then looked for companies with a large amount of cash on hand (Current Ratio>2)(Quick Ratio>2).
Do you think these small-cap stocks should have higher valuations? Use this list as a starting-off point for your own analysis.
1) Applied Micro Circuits Corp. (AMCC)
|Industry||Semiconductor - Integrated Circuits|
|1-Year Projected Earnings Per Share Growth Rate||103.80%|
Applied Micro Circuits Corporation provides semiconductor solutions for data center, enterprise, telecom, and consumer/small medium business markets. The company designs, develops, markets, and supports integrated circuits used for processing, transporting, and storing information. The company offers its solutions in the United States, Taiwan, Hong Kong, Europe, China, Japan, Malaysia, Singapore, and other Asian countries. Applied Micro Circuits Corporation was founded in 1979 and is headquartered in Sunnyvale, California.
2) Intersil Corporation (ISIL)
|Industry||Semiconductor - Broad Line|
|1-Year Projected Earnings Per Share Growth Rate||542.90%|
Intersil Corporation designs, develops, manufactures, and markets analog and mixed-signal integrated circuits for applications in the industrial, computing, consumer, and communications electronics markets. The company markets its products through distributors and value added resellers to original equipment manufacturers, original design manufacturers, and contract manufacturers in China, the United States, South Korea, Taiwan, Japan, Germany, Singapore, and Mexico. Intersil Corporation was founded in 1999 and is headquartered in Milpitas, California.
3) Intermolecular, Inc. (IMI)
|Industry||Semiconductor Equipment & Materials|
|1-Year Projected Earnings Per Share Growth Rate||1350.00%|
Intermolecular, Inc., together with its subsidiaries, provides high productivity combinatorial technology products and services. Its HPC platform includes wet processing tools that apply HPC methods to fluids-based applications, such as cleans, deposition and wet etch, self-assembly, and surface treatment processes; and dry processing tools, which apply HPC methods to vapor-based applications for primary, secondary, and tertiary screening. The company was formerly known as The BEP Group, Inc. and changed its name to Intermolecular, Inc. in November 2004. Intermolecular, Inc. was founded in 2004 and is headquartered in San Jose, California.
4) TriQuint Semiconductor, Inc. (TQNT)
|Industry||Semiconductor - Integrated Circuits|
|1-Year Projected Earnings Per Share Growth Rate||2700.00%|
TriQuint Semiconductor, Inc. provides radio frequency solutions and technology for communications, defense, and aerospace companies worldwide. The company designs, develops, and manufactures RF solutions with gallium arsenide, gallium nitride, bipolar high electron mobility transistor, surface acoustic wave, temperature compensated surface acoustic wave, bulk acoustic wave, copper flip, and wafer level packaging technologies. The company sells its products through independent manufacturers' representatives, independent distributors, and direct sales staff. TriQuint Semiconductor, Inc. was founded in 1981 and is headquartered in Hillsboro, Oregon.
*Company profiles were sourced from Google Finance and Yahoo Finance. Financial data was sourced from Finviz on 09/22/2012.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.