3 Cash-Loaded Tech Small Caps Analysts Rate 'Strong Buys'

Includes: COHR, EFII, WSTL
by: ZetaKap

When a company has a significant amount of cash reserves, it can usually be interpreted as a vote of confidence. After all, a large amount of cash allows a company to enact strategies for growth or hold steady during economic lulls. With this in mind we ran a scan to find companies in the tech sector that have a high level of liquidity. We narrowed our list to include those who have also received a recent 'Strong Buy' rating from industry analysts. Take a look at the summaries below to start your research.

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 technology stocks. We then looked for businesses that analysts rate as "Strong Buy" (mean recommendation < 2). We then looked for companies with a large amount of cash on hand (Current Ratio>2)(Quick Ratio>2). We did not screen out any market caps.

Do you think these stocks have strong fundamentals? Please use our list to assist with your own analysis.

1) Westell Technologies Inc. (NASDAQ:WSTL)

Sector Technology
Industry Communication Equipment
Market Cap $136.84M
Beta 1.67

WSTL stock chart

Key Metrics

Analysts' Rating 1.50
Current Ratio 22.63
Quick Ratio 21.09
Short Interest 4.45%

Westell Technologies, Inc., through its subsidiaries, designs, manufactures, and distributes telecommunications products to telephone companies and other telecommunications service providers. It operates in two segments, Westell and Customer Networking Solutions. The Westell segment provides a range of indoor and outdoor cabinets, enclosures, and mountings; power distribution products; Ethernet network interface devices (NIDs), industrial switches, and mounting solutions; NIDs for TDM/SONET networks and service demarcation; wireless signal conditioning and monitoring products for cellular networks; span powering equipment; and remote monitoring devices, as well as customized systems integration services to integrated wireline/wireless telecommunications service providers, wireless service providers, and industrial and utility companies.

2) Coherent Inc. (NASDAQ:COHR)

Sector Technology
Industry Scientific & Technical Instruments
Market Cap $1.17B
Beta 1.12

COHR stock chart

Key Metrics

Analysts' Rating 1.40
Current Ratio 3.59
Quick Ratio 2.63
Short Interest 2.82%

Coherent, Inc. provides photonics-based solutions for a range of commercial and scientific research applications worldwide. The company engages in designing, manufacturing, servicing, and marketing lasers, laser tools, precision optics, and related accessories. Its products are used in a range of applications, including microelectronics, scientific research and government programs, original equipment manufacturer components and instrumentation, and materials processing markets.

3) Electronics for Imaging, Inc. (NASDAQ:EFII)

Sector Technology
Industry Computer Peripherals
Market Cap $716.87M
Beta 1.24

EFII stock chart

Key Metrics

Analysts' Rating 1.30
Current Ratio 2.42
Quick Ratio 2.06
Short Interest 3.19%

Electronics For Imaging, Inc. provides color digital print controllers, digital inkjet printers, and business process automation solutions. The company's Fiery products consist of stand-alone print controllers and servers connected to digital copiers and other peripheral devices; embedded and design-licensed solutions used in digital copiers and multi-functional devices; optional software integrated into controller solutions that include Fiery Central and MicroPress; Entrac, a self-service and payment solution; PrintMe, a mobile printing application; and stand-alone software-based solutions, such as proofing and scanning solutions, including ColorProof XF, Fiery XF, ColorProof eXpress, and Xflow. It also offers industrial inkjet products, including VUTEk super-wide format digital industrial inkjet printers and inks used by billboard graphics printers, commercial photo labs, sign shops, graphic screen printers, specialty commercial printers, and digital graphics providers; Rastek hybrid and flatbed entry level production UV wide format inkjet printers; and Jetrion label and packaging digital inkjet printers, integration solutions, and specialty digital UV inks for primary and secondary label applications, and industrial label or flexible packaging markets.

*Company profiles were sourced from Google Finance and Yahoo Finance. Financial data was sourced from Finviz on 08/21/2012.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.