6 Small-Cap Basic Materials Stocks With Substantial Cash

Includes: BAS, BCPC, CJ, CRR, EXK, HL
by: ZetaKap

Small-cap stocks tend to offer investors greater growth opportunities than large-cap alternatives, although this comes with its fair share of added risk. One way to mitigate that risk is to look for small cap companies with good liquidity, meaning that they have cash on hand to cover expenses, make investments or acquisitions, or plow money back into R & D. Another way to minimize that risk is to look at the companies that analysts are backing. Today we ran a screen keeping these ideas in mind, and we came up with a pretty interesting list of companies.

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 small cap basic materials stocks. We then looked for companies that have a substantial amount of cash on hand (Current Ratio>2)(Quick Ratio>2). We then looked for companies that analysts rate as "Buy" or "Strong Buy" (mean recommendation < 3).

Do you think these small-cap stocks should be priced higher? Use our list along with your own analysis.

1) Endeavour Silver Corp. (NYSE:EXK)

Sector: Basic Materials
Industry: Silver
Market Cap: $846.06M
Beta: 1.13

Endeavour Silver Corp. has a Current Ratio of 12.33, a Quick Ratio of 9.61, and a Analysts' Rating of 2.00. The short interest was 1.32% as of 06/20/2012. Endeavour Silver Corp., a mid-cap silver mining company, focuses on the growth of its silver production, reserves, and resources in Mexico and Chile. It principally holds interests in two producing silver mines in Mexico, including the Guanacevi mine, located in Durango State; and the Guanajuato mine located in Guanajuato State.

2) Balchem Corp. (NASDAQ:BCPC)

Sector: Basic Materials
Industry: Chemicals - Major Diversified
Market Cap: $947.44M
Beta: 0.73

Balchem Corp. has a Current Ratio of 7.02, a Quick Ratio of 6.25, and a Analysts' Rating of 2.00. The short interest was 5.95% as of 06/20/2012. 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 Specialty Products segment offers ethylene oxide primarily for use in the health care industry; and single use canisters with ethylene oxide for use in medical device sterilization. It also sells propylene oxide as a fumigant to aid in the control of insects and microbiological spoilage; to reduce bacterial and mold contamination; to customers seeking smaller quantities and whose requirements include utilization in various chemical synthesis applications; and to make paints durable, as well as for manufacturing specialty starches and textile coatings.

3) CARBO Ceramics Inc. (NYSE:CRR)

Sector: Basic Materials
Industry: Oil & Gas Equipment & Services
Market Cap: $1.86B
Beta: 0.85

CARBO Ceramics Inc. has a Current Ratio of 4.35, a Quick Ratio of 2.33, and a Analysts' Rating of 2.40. The short interest was 33.25% as of 06/20/2012. CARBO Ceramics Inc. manufactures and supplies resin-coated ceramic and resin-coated sand proppants primarily used in the hydraulic fracturing of natural gas and oil wells in the United States and internationally. The company offers proppants, including CARBOHSP and CARBOPROP designed for use in deep gas wells; CARBOLITE used in medium depth oil and gas wells; CARBOECONOPROP; CARBOHYDROPROP used to enhance performance in slickwater fracture treatments; CARBOBOND LITE for oil and natural gas wells that are subject to the risk of proppant flow-back; and CARBOBOND RCS, a conductivity proppant. It also provides fracture simulation software, as well as offers fracture design, engineering, and consulting services to oil and natural gas companies.

4) C&J Energy Services, Inc. (CJES)

Sector: Basic Materials
Industry: Oil & Gas Equipment & Services
Market Cap: $981.34M
Beta: -

C&J Energy Services, Inc. has a Current Ratio of 2.69, a Quick Ratio of 2.06, and a Analysts' Rating of 1.90. The short interest was 25.47% as of 06/20/2012. C&J Energy Services, Inc., through its subsidiaries, provides hydraulic fracturing, coiled tubing, and pressure pumping services to oil and natural gas exploration and production companies. The company offers hydraulic fracturing services to enhance the production of oil and natural gas from formations with low permeability; coiled tubing services to perform various functions associated with well-servicing operations and to facilitate completion of horizontal wells; and pressure pumping services, which include well injection, cased-hole testing, workover pumping, mud displacement, wireline pumpdowns, and pumping-down coiled tubing. It also constructs and sells oilfield equipment comprising hydraulic fracturing pumps, coiled tubing units, pressure pumping units, and other equipment for third-party customers in the energy services industry; and provides equipment repair services, and oilfield parts and supplies.

5) Aurizon Mines Ltd. (AZK)

Sector: Basic Materials
Industry: Gold
Market Cap: $814.83M
Beta: 0.58

Aurizon Mines Ltd. has a Current Ratio of 6.83, a Quick Ratio of 6.39, and a Analysts' Rating of 2.30. The short interest was 0.84% as of 06/20/2012. 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.

6) Basic Energy Services, Inc. (NYSE:BAS)

Sector: Basic Materials
Industry: Oil & Gas Equipment & Services
Market Cap: $428.27M
Beta: 2.24

Basic Energy Services, Inc. has a Current Ratio of 2.86, a Quick Ratio of 2.59, and a Analysts' Rating of 2.20. The short interest was 9.15% as of 06/20/2012. Basic Energy Services, Inc. provides various well site services to oil and natural gas drilling and producing companies in the United States. Its Completion and Remedial Services segment provides pressure pumping services, such as cementing, acidizing, fracturing, coiled tubing, nitrogen, and pressure testing; rental and fishing tools; coiled tubing; snubbing services; thru-tubing; cased-hole wireline services; and underbalanced drilling in low pressure and fluid sensitive reservoirs. This segment operates 222 pressure pumping units.

*Company profiles were sourced from Finviz. Financial data was sourced from Finviz.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.