By the time a company reaches the mid cap size, you would think that a company has figured out how to have it all: sound profits, minimal debt, sizeable cash reserves, and always on target with their growth projections. But as we know, business does not always go as planned and it is difficult to have all of those traits going simultaneously. Today we found mid cap stocks in which companies have two characteristics that bode well for future growth: a high level of liquidity and impressive growth projections for the coming year. When a company is headed for significant growth in a relatively short amount of time, it is critical that they have access to cash reserves in case of cash flow issues or unforeseen expenses. The data below serves as a starting point for further research on these mid cap stocks.
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).
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. We then looked for businesses that have strong liquidity (Current Ratio>2)(Quick Ratio>2). We then screened for businesses that are considered high-growth, with 1-year projected EPS growth above 25%. We did not screen out any sectors.
Do you think these mid-cap stocks are at too low of valuations, given their fundamentals? Use our list along with your own analysis.
1) BioMarin Pharmaceutical Inc. (BMRN)
| Sector | Healthcare |
| Industry | Biotechnology |
| Market Cap | $4.97B |
| Beta | 1.14 |
Key Metrics
| Current Ratio | 5.68 |
| Quick Ratio | 4.68 |
| 1-Year Projected Earnings Per Share Growth Rate | 42.50% |
| Short Interest | 9.12% |
BioMarin Pharmaceutical Inc. develops and commercializes biopharmaceuticals for serious diseases and medical conditions in the United States, Europe, Latin America, and rest of the world. It has a collaboration agreement with Genzyme Corporation for the manufacture of Aldurazyme; and an agreement with Merck Serono S.A. for the further development and commercialization of Kuvan and other products containing 6R-BH4 and PEG-PAL for PKU. BioMarin Pharmaceutical Inc. was founded in 1996 and is headquartered in Novato, California.
2) Forest Laboratories Inc. (FRX)
| Sector | Healthcare |
| Industry | Drug Manufacturers - Other |
| Market Cap | $9.59B |
| Beta | 0.65 |
Key Metrics
| Current Ratio | 4.20 |
| Quick Ratio | 3.86 |
| 1-Year Projected Earnings Per Share Growth Rate | 131.34% |
| Short Interest | 2.20% |
Forest Laboratories, Inc. develops, manufactures, and sells branded forms of ethical drug products primarily in the United States and Europe. The company was founded in 1956 and is headquartered in New York, New York.
3) Cheniere Energy Partners LP. (CQP)
| Sector | Basic Materials |
| Industry | Oil & Gas Pipelines |
| Market Cap | $3.78B |
| Beta | 0.66 |
Key Metrics
| Current Ratio | 2.43 |
| Quick Ratio | 2.41 |
| 1-Year Projected Earnings Per Share Growth Rate | 30.40% |
| Short Interest | 1.79% |
Cheniere Energy Partners, L.P., through its subsidiary, Sabine Pass LNG, L.P., owns and operates the Sabine Pass liquefied natural gas terminal located in western Cameron Parish, Louisiana on the Sabine Pass Channel. The company founded in 2003 and is based in Houston, Texas. Cheniere Energy Partners, L.P. is subsidiary of Cheniere Energy, Inc.
4) Resolute Forest Products Inc. (RFP)
| Sector | Consumer Goods |
| Industry | Paper & Paper Products |
| Market Cap | $2.09B |
| Beta | - |
Key Metrics
| Current Ratio | 2.76 |
| Quick Ratio | 2.04 |
| 1-Year Projected Earnings Per Share Growth Rate | 38.57% |
| Short Interest | 7.96% |
Resolute Forest Products Inc. manufactures and sells newsprint, commercial printing papers, market pulp, and wood products in the United States. It produces newsprint; coated mechanical papers for use in magazines, catalogs, books, retail advertising, direct mail, and coupons; and specialty papers, including supercalendered, superbright, high bright, bulky book, and directory papers for use in books, retail advertising, direct mail, coupons, and other commercial printing applications. The company was formerly known as AbitibiBowater Inc. and changed its name to Resolute Forest Products Inc. in May 2012. Resolute Forest Products Inc. is headquartered in Montreal, Canada.
5) Hyatt Hotels Corporation (H)
| Sector | Services |
| Industry | Lodging |
| Market Cap | $6.60B |
| Beta | - |
Key Metrics
| Current Ratio | 2.36 |
| Quick Ratio | 2.22 |
| 1-Year Projected Earnings Per Share Growth Rate | 52.54% |
| Short Interest | 4.58% |
Hyatt Hotels Corporation, together with its subsidiaries, engages in the management, franchising, ownership, and development of Hyatt-branded hotels, resorts, and residential and vacation ownership properties worldwide. As of June 30, 2012, its portfolio consisted of 492 properties in 45 countries worldwide. The company operates its hotels under the Hyatt, Park Hyatt, Andaz, Grand Hyatt, Hyatt Regency, Hyatt Place, Hyatt House, Hyatt Residences, and Hyatt Vacation Club brands. It serves corporations; national, state, and regional associations; specialty market accounts, including social, government, military, educational, religious, and fraternal; travel organizations; and a group of individual consumers. The company was formerly known as Global Hyatt Corporation and changed its name to Hyatt Hotels Corporation in June 2009. Hyatt Hotels Corporation was founded in 1957 and is headquartered in Chicago, Illinois.
*Company profiles were sourced from Google Finance and Yahoo Finance. Financial data was sourced from Finviz on 09/26/2012.
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.