Despite all of the ups and downs in the tech sector, it still remains a category that consistently offers tremendous growth opportunities. For our list today, we found four technology companies that have projected EPS growth rates for the next year that start above 300%. While projected growth certainly speaks to many investors, we all know expansion requires a significant amount of cash. With that in mind, we made sure all of the companies included below have a high level of liquidity that can be accessed to overcome any hurdles on the path to achieving the projected growth. We think you will find our list of tech stocks well worth additional research.
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 technology stocks. We next screened for businesses that have high future earnings per share growth forecasts(1-year projected EPS Growth Rate>25%). From here, we then looked for companies that have strong liquidity (Current Ratio>2)(Quick Ratio>2). We did not screen out any market caps.
Do you think these stocks will perform well? Use this list as a starting-off point for your own analysis.
1) LTX-Credence Corporation (LTXC)
|Industry||Semiconductor Equipment & Materials|
|1-Year Projected Earnings Per Share Growth Rate||347.06%|
LTX-Credence Corporation designs, manufactures, markets, and services automated test equipment solutions for the wireless, computing, automotive, and consumer markets. The company's product portfolio includes Diamond platform, a package for testing microcontrollers and cost sensitive consumer devices; X-Series platform that offers configurations for optimal testing of ASSP and ASIC, power, automotive, mixed signal, and RF applications; and ASL platform, which is used for testing linear, low-end mixed signal, precision analog, and power management devices. The company was founded in 1976 and its headquarters is in Norwood, Massachusetts.
2) Silicon Image, Inc. (SIMG)
|Industry||Semiconductor - Broad Line|
|1-Year Projected Earnings Per Share Growth Rate||450.00%|
Silicon Image, Inc. provides wireless and wired connectivity solutions that enable the distribution and presentation of high-definition content for mobile, consumer electronics, and personal computer markets. The company delivers its technology via semiconductor and intellectual property products and services. It offers high-definition multimedia interface (HDMI) and mobile high-definition link (MHL) transmitters for mobile devices, such as smartphones and tablets; and MHL-to-HDMI bridges for docking stations and adapters connecting MHL mobile products with HDMI-enabled digital televisions (DTVs) and displays. Silicon Image, Inc. was founded in 1995 and its headquarters is in Sunnyvale, California.
3) Cohu, Inc. (COHU)
|Industry||Semiconductor Equipment & Materials|
|1-Year Projected Earnings Per Share Growth Rate||400.00%|
Cohu, Inc. provides semiconductor test equipment, microwave communication systems, and video cameras. Its Semiconductor Equipment segment develops, manufactures, and sells pick-and-place semiconductor test handlers, burn-in related equipment, and thermal sub-systems to semiconductor manufacturers and semiconductor test subcontractors. The company was formerly known as Cohu Electronics, Inc. and changed its name to Cohu, Inc. in 1972. Cohu, Inc. was founded in 1947 and is based in Poway, California.
4) KEMET Corp. (KEM)
|1-Year Projected Earnings Per Share Growth Rate||1640.00%|
KEMET Corporation, together with its subsidiaries, engages in the manufacture and sale of various capacitors under the KEMET brand worldwide. Its products include solid tantalum and aluminum capacitors, multilayer ceramic capacitors, film capacitors, electrolytic capacitors, and paper capacitors. The company offers its products for use in adaptive cruise controls, lane departure warning, rearview camera systems, audio systems, tire pressure monitoring systems, power train electronics, instrumentation, airbag systems, anti-lock braking and stabilization systems, hybrid and electric drive vehicles, electronic engine control modules, driver comfort controls, and security systems in the automotive industry; copiers, point-of-sale terminals, and fax machines in the business equipment industry; and cellular phones, telephones, switching equipment, relays, base stations, and wireless infrastructure in the communications industry. The company was founded in 1919 and its headquarters is in Simpsonville, South Carolina.
Company profiles were sourced from Google Finance and Yahoo Finance. Financial data was sourced from Finviz on 10/04/2012.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.