There are appropriate times and circumstances when borrowing against equity is a legitimate means of financing. But when debt is incurred without a realistic strategy for paying it off in a timely manner, then it calls into question the integrity of the borrower. With this in mind, we searched for companies at the mid cap range that have minimal long-term debt. This is an especially critical asset for any company that intends to grow, as excessive leverage tends to reveal short comings in fiscal oversight. For our second trait, we narrowed the field to include companies that have projected EPS growth projections above 25% for the coming year. See the summaries and graphs below to begin your own evaluation of these mid cap stocks.
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.
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. From here, we then looked for companies that operate with little to no long-term debt (Long Term D/E Ratio<.1). We then looked for companies with estimated high-growth, with 1-year projected EPS growth above 25%. We did not screen out any sectors.
Do you think these mid-cap stocks have strong operations? Please use our list to assist with your own analysis.
1) Titanium Metals Corporation (TIE)
|Industry||Industrial Metals & Minerals|
|Long Term Debt/Equity Ratio||0.08|
|1-Year Projected Earnings Per Share Growth Rate||31.82%|
Titanium Metals Corporation produces and sells titanium melted and mill products. It provides titanium sponge, which is the basic form of titanium metal used in titanium products; melted products, such as ingots, electrodes, and slabs that are the result of melting titanium sponge and titanium scrap; mill products, which are forged and rolled from ingot or slab, including billets, bars, plates, sheets, strips, and pipes; and fabrications, such as spools, pipe fittings, manifolds, and vessels, as well as offers titanium scrap and titanium tetrachloride. The company was founded in 1950 and is headquartered in Dallas, Texas.
2) The Ultimate Software Group, Inc. (ULTI)
|Industry||Internet Software & Services|
|Long Term Debt/Equity Ratio||0.05|
|1-Year Projected Earnings Per Share Growth Rate||40.20%|
The Ultimate Software Group, Inc., together with its subsidiaries, designs, develops, and markets human capital management software-as-a-service solutions to businesses across various industries. It serves approximately 2,300 customers in 115 countries. The company was founded in 1990 and is headquartered in Weston, Florida.
3) Catamaran Corporation (CTRX)
|Long Term Debt/Equity Ratio||0.08|
|1-Year Projected Earnings Per Share Growth Rate||61.82%|
Catamaran Corporation provides pharmacy benefit management services and healthcare information technology solutions to the healthcare benefits management industry in North America. The company offers informedRx, a suite of PBM services; and RxCLAIM, an online transaction processing system to provide online adjudication of third-party prescription drug claims at the point of service, such as claims management and review, as well as payment and billing support and real-time functionality for updating benefit, price, member, provider, and drug details. The company was formerly known as SXC Health Solutions Corp. and changed its name to Catamaran Corporation in July 2012. Catamaran Corporation was founded in 1993 and is headquartered in Lisle, Illinois.
4) NetSuite Inc. (N)
|Industry||Business Software & Services|
|Long Term Debt/Equity Ratio||0.01|
|1-Year Projected Earnings Per Share Growth Rate||59.09%|
NetSuite Inc. provides cloud-based financials/enterprise resource planning software suites in the United States and internationally. It offers NetSuite, a single platform for financials/ERP, customer relationship management, professional services automation, and e-commerce capabilities that automate processes across departments. The company was founded in 1998 and is headquartered in San Mateo, California.
*Company profiles were sourced from Google Finance and Yahoo Finance. Financial data was sourced from Finviz on 10/23/2012.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.