Small-cap stocks tend to offer investors greater growth opportunities than large-cap alternatives, although this comes with its fair share of added risk. Are you looking for small-caps? Do you feel better knowing your favorite companies have enough cash to cover their operating expenses for a very long time? Looking for undervalued stocks? We ran a screen you could find useful.
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 Price/Sales ratio is a price-multiple valuation metric used to help identify if a firm is cheap by its twelve month trailing sales numbers. In the most basic terms it let's an investor know how much the investment community is willing to pay for every dollars worth of sales. A firm with a P/S ratio of one or lower would be viewed as cheap because investors are paying $1 or less for every dollars worth of a firm's sales. On the other hand, a firm is generally considered to be expensive when the P/S ratio is above three. These are general guidelines used by the investment community not hard rules to be clear. Price/Sales Ratio = Current Stock Price/Revenue (sales) per Share
The Price/Book Value Ratio is a great price-multiple valuation metric to find companies that could be potentially undervalued or overvalued. If a firm has a Price/Book Value Ratio of less than 1 it is stated to be trading below "break up" value. A lower P/BV Ratio can indicate a potentially mispriced company or indicate that something is fundamentally wrong with it.
We first looked for small cap stocks. We then screened for businesses that have a substantial amount of cash on hand (Current Ratio>2)(Quick Ratio>2). We next screened for businesses that are trading at a discount (P/S<1)(P/BV<1). We did not screen out any sectors.
Do you think these small-cap stocks deserve to grow higher? Use our list to help with your own analysis.
1) Photronics Inc. (NASDAQ:PLAB)
|Industry:||Semiconductor - Integrated Circuits|
Photronics Inc. has a Current Ratio of 3.32 and Quick Ratio of 3.09 and Price/Sales Ratio of 0.70 and Price/Book Value Ratio of 0.68. The short interest was 13.12% as of 05/07/2012. Photronics, Inc. engages in the manufacture and sale of photomasks primarily in the United States, Europe, and Asia. Photomasks are high precision photographic quartz plates containing microscopic images of electronic circuits, which are used in the manufacture of semiconductors and flat panel displays; and used as masters to transfer circuit patterns onto semiconductor wafers and flat panel substrates during the fabrication of integrated circuits, various flat panel displays, and other types of electrical and optical components. The company sells its photomasks to semiconductor designers, manufacturers, foundries, and other high performance electronics manufacturers through its sales personnel and customer service representatives.
2) Benchmark Electronics Inc. (NYSE:BHE)
|Industry:||Printed Circuit Boards|
Benchmark Electronics Inc. has a Current Ratio of 3.33 and Quick Ratio of 2.23 and Price/Sales Ratio of 0.37 and Price/Book Value Ratio of 0.77. The short interest was 2.97% as of 05/07/2012. Benchmark Electronics, Inc. provides electronics manufacturing services in the Americas, Asia, and Europe. The company provides engineering solutions, such as new product design, prototype, test, and related engineering solutions; and custom test, and automation equipment design and build solutions. It also offers manufacturing and fulfillment solutions, including printed circuit board assembly, assembly of subsystems, circuitry and functionality testing of printed assemblies, environmental and stress testing, and component reliability testing; flex circuit assembly and test solutions; and systems assembly and test solutions, as well as environmental stress tests of assemblies of boards or systems.
3) Lifepoint Hospitals Inc. (NASDAQ:LPNT)
Lifepoint Hospitals Inc. has a Current Ratio of 2.25 and Quick Ratio of 2.03 and Price/Sales Ratio of 0.59 and Price/Book Value Ratio of 0.91. The short interest was 7.47% as of 05/07/2012. LifePoint Hospitals, Inc., through its subsidiaries, operates general acute care hospitals in non-urban communities in the United States. The company's hospitals provide various medical and surgical services, including general surgery, internal medicine, obstetrics, emergency room care, radiology, oncology, diagnostic care, coronary care, rehabilitation services, and pediatric services, as well as specialized services comprising open-heart surgery, skilled nursing, psychiatric care, and neuro-surgery. Its hospitals also offer various outpatient services, such as same-day surgery, laboratory, X-ray, respiratory therapy, imaging, sports medicine, and lithotripsy.
4) PHI Inc. (NASDAQ:PHII)
|Industry:||Air Services, Other|
PHI Inc. has a Current Ratio of 5.93 and Quick Ratio of 4.71 and Price/Sales Ratio of 0.65 and Price/Book Value Ratio of 0.74. The short interest was 0.43% as of 05/07/2012. PHI, Inc., together with its subsidiaries, provides helicopter transportation services to the integrated energy, and independent exploration and production companies primarily in the Gulf of Mexico and internationally. The company operates in three segments: Oil and Gas, Air Medical, and Technical Services. The Oil and Gas segment provides helicopter services to oil and gas exploration and production companies, and other offshore oil service companies primarily for routine transportation of personnel and equipment; transportation of personnel during medical and safety emergencies; and evacuation of personnel during the threat of hurricanes and other adverse weather conditions.
5) Harmonic Inc. (NASDAQ:HLIT)
Harmonic Inc. has a Current Ratio of 3.68 and Quick Ratio of 3.07 and Price/Sales Ratio of 0.95 and Price/Book Value Ratio of 0.92. The short interest was 3.09% as of 05/07/2012. Harmonic Inc. designs, manufactures, and sells video infrastructure products and system solutions to create, prepare, and deliver a range of video services for television and media platforms in the united States and internationally. Its products include video production platforms and playout solutions, such as video servers used by broadcasters, content owners, and multi-channel network operators to create and play-to-air television channels; video-optimized storage, which provides storage capacity and access bandwidth to support media production applications comprising video editing, content transformation, and media library management; and media applications that provide media integrated management and workflow control over content stored on its systems. The company offers video processing products, including broadcast encoders; contribution and distribution encoders; stream processing and statistical multiplexing solutions; content preparation and delivery for multi-screen applications; decoders and descramblers; and management and control software.
6) Overseas Shipholding Group Inc. (NYSE:OSG)
Overseas Shipholding Group Inc. has a Current Ratio of 2.44 and Quick Ratio of 2.30 and Price/Sales Ratio of 0.33 and Price/Book Value Ratio of 0.22. The short interest was 36.21% as of 05/07/2012. Overseas Shipholding Group, Inc., a tanker company, primarily engages in the ocean transportation of crude oil and petroleum products. The company owns and operates a fleet of oceangoing vessels that engages in the transportation of liquid cargoes in the United States flag trades and international markets. It is involved in the bulk shipping of crude oil and refined petroleum products to independent and state-owned oil companies, oil traders, refinery operators, and the United States and international government entities.
*Company profiles were sourced from Finviz. Financial data was sourced from Finviz and Yahoo Finance.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.