Companies that have amassed a stock pile of cash send an impressive message to prospective investors. These companies are well positioned to make strategic moves that propel expansion as well as hold steady if the unexpected occurs. We ran a screen to find highly liquid basic materials stocks. We then narrowed our search to stocks that have had significant increases in their EPS growth rates and net margins in the past year. Profitability and cash reserves make for companies with strong financial management. We think you will find our list of basic materials stocks worthy of further investigation.
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 Net Margin is a profitability metric that illustrates, by percentage, how much of every dollar earned gets turned into a bottom line profit. This is just one of many profitability metrics used by investors and analysts to better understand what the company is being left with at the end of the day. Generally, a firm that can expand its net profit margins over a period of time will see its stock price rise as well due to the trend of increasing profitability. Net Margin = Net Income/Total Revenue
EPS growth (earnings per share growth) illustrates the growth of earnings per share over time. EPS growth rates help investors identify stocks that are increasing or decreasing in profitability. This profitability metric is generally a key driver in the price of the stock as it directly correlates to the profitability of the company as a whole.
We first looked for basic materials stocks. We then looked for companies that have strong liquidity (Current Ratio>2)(Quick Ratio>2). We then screened for businesses that have strong bottom line profitability (Net Margin [TTM]>10%)(1-year fiscal EPS growth rate>10%). We did not screen out any market caps.
Do you think these stocks hold solid value? Use this list as a starting-off point for your own analysis.
1) Bolt Technology Corp. (BOLT)
| Sector | Basic Materials |
| Industry | Oil & Gas Equipment & Services |
| Market Cap | $123.47M |
| Beta | 1.59 |
Key Metrics
| Current Ratio | 9.87 |
| Quick Ratio | 6.30 |
| Net Margin | 11.75% |
| Earnings Per Share Growth Rate | 12.59% |
| Short Interest | 3.66% |
Bolt Technology Corporation engages in the development, manufacture, and sale of marine seismic data acquisition equipment and underwater remotely operated robotic vehicles worldwide. It operates through four segments: Seismic Energy Sources, Underwater Cables and Connectors, Seismic Energy Source Controllers, and Underwater Robotic Vehicles. The company serves marine seismic exploration contractors, oil and gas companies, defense industry, fire and rescue organizations, and educational institutions, as well as federal, state, and local governmental units. Bolt Technology Corporation markets its products directly, as well as through sales agents and a network of distributors. The company was founded in 1960 and is headquartered in Norwalk, Connecticut.
2) Yongye International, Inc. (YONG)
| Sector | Basic Materials |
| Industry | Agricultural Chemicals |
| Market Cap | $224.90M |
| Beta | 1.49 |
Key Metrics
| Current Ratio | 5.57 |
| Quick Ratio | 4.13 |
| Net Margin | 23.26% |
| Earnings Per Share Growth Rate | 48.18% |
| Short Interest | 7.32% |
Yongye International, Inc. engages in the research, development, manufacture, and sale of fulvic acid based crop and animal nutrient products for the agriculture and stock farming industry in the People's Republic of China. It provides liquid crop nutrient products that consist of fulvic acid compound base and nutrients for the health of crops; and powder animal nutrient products, which include fulvic acid compound base and additional nutrients, and Chinese herbs that reduce inflammation for dairy cows. The company markets its products under the Shengmingsu trade name through a network of county-level distributors and independently owned branded retailers. Yongye International, Inc. is based in Beijing, the People's Republic of China.
3) Endeavour Silver Corp. (EXK)
| Sector | Basic Materials |
| Industry | Silver |
| Market Cap | $1.04B |
| Beta | 1.18 |
Key Metrics
| Current Ratio | 11.24 |
| Quick Ratio | 9.09 |
| Net Margin | 19.61% |
| Earnings Per Share Growth Rate | 169.73% |
| Short Interest | 1.22% |
Endeavour Silver Corp., a mid-cap silver mining company, focuses on the growth of its silver production, reserves, and resources in Mexico and Chile. The company has three producing silver mines in Mexico, the Guanacevi Mine in the state of Durango, and the Bolaitos and El Cubo Mines in the state of Guanajuato. It also holds interests in exploration projects in Mexico, including the Guadalupe Y Calvo project, Parral project, Arroyo Seco project, the San Sebastian project, Panuco project, and Lourdes project. The company was founded in 1981 and is headquartered in Vancouver, Canada.
4) Balchem Corp. (BCPC)
| Sector | Basic Materials |
| Industry | Chemicals - Major Diversified |
| Market Cap | $1.10B |
| Beta | 0.73 |
Key Metrics
| Current Ratio | 6.62 |
| Quick Ratio | 5.95 |
| Net Margin | 13.20% |
| Earnings Per Share Growth Rate | 14.09% |
| Short Interest | 3.12% |
Balchem Corporation develops, manufactures, and sells specialty performance ingredients and products for the food, nutritional, feed, pharmaceutical, and medical sterilization industries in the United States and internationally. It operates in three segments: Specialty Products; Food, Pharma & Nutrition; and Animal Nutrition & Health. The company sells its products through its sales force, independent distributors, and sales agents. Balchem Corporation was founded in 1967 and is headquartered in New Hampton, New York.
5) Almaden Minerals Ltd. (AAU)
| Sector | Basic Materials |
| Industry | Industrial Metals & Minerals |
| Market Cap | $175.88M |
| Beta | 1.08 |
Key Metrics
| Current Ratio | 48.46 |
| Quick Ratio | 48.00 |
| Net Margin | 2944.21% |
| Earnings Per Share Growth Rate | 288.18% |
| Short Interest | 2.60% |
Almaden Minerals Ltd., an exploration stage company, engages in the acquisition, exploration, and development of mineral properties in Canada, the United States, and Mexico. The company primarily explores for gold, silver, and copper deposits. Its principal properties include the Elk gold and silver property located in southern British Columbia, Canada; diamond property in the Northwest Territories, Canada; Willow project, a copper-gold porphyry project in Nevada, the United States; El Cobre property, a copper-gold porphyry target on the east coast of Mexico; San Carlos project, a copper-gold project situated in the state of Tamaulipas, Mexico; and Cadera project, a gold project located in Puebla State, Mexico. The company was founded in 1980 and is headquartered in Vancouver, Canada.
6) Aurizon Mines Ltd. (AZK)
| Sector | Basic Materials |
| Industry | Gold |
| Market Cap | $877.95M |
| Beta | 0.55 |
Key Metrics
| Current Ratio | 7.00 |
| Quick Ratio | 6.56 |
| Net Margin | 19.05% |
| Earnings Per Share Growth Rate | 151.37% |
| Short Interest | 0.74% |
Aurizon Mines Ltd. engages in the acquisition, exploration, development, and production of gold properties in North America. The company's principal properties include the Casa Berardi gold mine and the Joanna gold project both located in the Abitibi region of northwestern Quebec. Aurizon Mines Ltd. was founded in 1988 and is headquartered in Vancouver, Canada.
*Company profiles were sourced from Google Finance and Yahoo Finance. Financial data was sourced from Finviz on 09/23/2012.
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.