7 Low-Debt Mid-Cap Stocks Flush With Cash Reserves

by: ZetaKap

When you don't want the risk that comes with investments at the small-cap level, but still desire growth opportunities, mid-cap stocks fit the bill. To find mid caps that are well positioned for growth, it is important that a company not be over leveraged. Today we screened for mid-cap stocks that are not debt laden and have considerable cash reserves. These two elements create an environment that fosters the flexibility necessary to open new markets, make strategic acquisitions, or hold steady during economic downturns. We think you will find our list rather interesting.

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 the company is to meet current obligations using liquid assets).

The Debt/Equity Ratio illustrates how aggressively a company is financing its growth via debt. The more debt financing that is used in a capital structure, the more volatile earnings can become due to the additional interest expense. Should a company's potentially enhanced earnings fail to exceed the cost associated with debt financing over time, this can lead the company toward substantial trouble.

The Long Term Debt/Equity Ratio is a variation of the traditional debt-to-equity ratio; this value computes the proportion of a company's long-term debt compared to its available capital. By using this ratio, investors can identify the amount of leverage utilized by a specific company and compare it to others to help analyze the company's risk exposure. Generally, companies that finance a greater portion of their capital via debt are considered riskier than those with lower leverage ratios.

We first looked for mid-cap stocks. Next, we screened for businesses with a large amount of cash on hand (Current Ratio>2)(Quick Ratio>2). From here, we then looked for companies that operate with little to no debt (D/E Ratio<0.1). We then looked for companies that operate with little to no long-term debt (Long Term D/E Ratio<0.1). We did not screen out any sectors.

Do you think these mid-cap stocks are in strong position for future growth? Please use our list to assist with your own analysis.

1) Makita Corp. (NASDAQ:MKTAY)

Sector Industrial Goods
Industry Small Tools & Accessories
Market Cap $5.23B
Beta 0.96

MKTAY stock chart

Key Metrics

Current Ratio 5.81
Quick Ratio 3.07
Debt/Equity Ratio 0.01
Long Term Debt/Equity Ratio 0.00
Short Interest 0.02%

Makita Corporation engages in the manufacture and sale of a range of power tools for professional users worldwide. It offers drills, including pistol-grip drills, D-handle drills, spade-handle drills, and angle drills, as well as cordless drills cordless driver drills, which are used for drilling in metals, woods, and plastics; grinders comprising portable disc grinders and bench grinders; and sanders that include portable disc sanders and belt sanders; rotary hammers for construction industry; and ordinary hammers. The company also provides hammer drills that are used as conventional drills on metal and masonry in the civil engineering and electrical contracting industries; demolition hammers and electric breakers, which are used for shattering hard surfaces; cordless impact drivers; circular saws for carpenters in the homebuilding industry; slide compound saws; and cutters. In addition, it provides gardening household products consisting of chain saws, hand-held vacuum cleaners for home use, industrial vacuum cleaners, submersible pumps, and garden tools, such as hedge trimmers; engine-equipped grass cutters and lawn mowers for trimming tree fences and cutting grass; and various parts and accessories, such as saw blades, drill bits, and grinding wheels.

2) Cobalt International Energy, Inc. (NYSE:CIE)

Sector Basic Materials
Industry Independent Oil & Gas
Market Cap $9.37B
Beta -

CIE stock chart

Key Metrics

Current Ratio 8.22
Quick Ratio 7.98
Debt/Equity Ratio 0.02
Long Term Debt/Equity Ratio 0.00
Short Interest 1.12%

Cobalt International Energy, Inc., a development stage company, operates as an independent oil-focused exploration and production company. It focuses on the deepwater of the United States Gulf of Mexico, and offshore Angola and Gabon in West Africa. The company has strategic relationships with Total E&P USA, Inc.

3) Myriad Genetics Inc. (NASDAQ:MYGN)

Sector Services
Industry Research Services
Market Cap $2.09B
Beta 0.43

MYGN stock chart

Key Metrics

Current Ratio 9.40
Quick Ratio 9.14
Debt/Equity Ratio 0.00
Long Term Debt/Equity Ratio 0.00
Short Interest 5.48%

Myriad Genetics, Inc., a molecular diagnostic company, focuses on the development and marketing of novel predictive medicine, personalized medicine, and prognostic medicine tests primarily in the United States. The company markets BRACAnalys medicine test for the treatment of hereditary breast and ovarian cancer; COLARIS molecular test for hereditary colorectal and uterine cancer; COLARIS AP medicine test for the treatment of hereditary colorectal cancer; and MELARIS medicine test to treat hereditary melanoma. It also offers OnDose, a personalized medicine test for colon cancer; PANEXIA, a predictive medicine test for pancreatic cancer; PREZEON, a personalized and prognostic medicine test for cancer; Prolaris, a prognostic medicine test for prostate cancer; and TheraGuide 5-FU, a personalized medicine test for drug toxicity.

4) Pan American Silver Corp. (NASDAQ:PAAS)

Sector Basic Materials
Industry Silver
Market Cap $2.59B
Beta 1.16

PAAS stock chart

Key Metrics

Current Ratio 6.07
Quick Ratio 4.33
Debt/Equity Ratio 0.03
Long Term Debt/Equity Ratio 0.02
Short Interest 1.35%

Pan American Silver Corp. engages in the exploration, acquisition, development, and operation of silver properties. The company also focuses on copper, zinc, lead, and gold minerals. It has mining operations in Mexico, Peru, Argentina, and Bolivia; and has non-producing silver resources in the United States and Argentina.

5) Gentex Corp. (NASDAQ:GNTX)

Sector Consumer Goods
Industry Auto Parts
Market Cap $2.65B
Beta 1.46

GNTX stock chart

Key Metrics

Current Ratio 7.33
Quick Ratio 5.51
Debt/Equity Ratio 0.00
Long Term Debt/Equity Ratio 0.00
Short Interest 4.96%

Gentex Corporation designs, develops, manufactures, and markets electro-optical products for the automotive, commercial building, and aircraft industries primarily in the United States, Germany, and Japan. It offers automotive mirrors, including automatic-dimming rearview mirrors, such as interior auto-dimming mirrors and exterior auto-dimming mirror sub-assemblies; and non-automatic-dimming rearview mirrors with electronic features. The company also provides fire protection products, which include smoke alarms and smoke detectors combined with various models of signaling appliances for office buildings, hotels, motels, military bases, college dormitories, nursing homes, and other commercial establishments; and single-station alarms for commercial and residential applications. In addition, it offers variable dimmable windows to the aircraft manufacturers.

6) Seattle Genetics Inc. (NASDAQ:SGEN)

Sector Healthcare
Industry Biotechnology
Market Cap $3.08B
Beta 1.04

SGEN stock chart

Key Metrics

Current Ratio 4.67
Quick Ratio 4.36
Debt/Equity Ratio 0.00
Long Term Debt/Equity Ratio 0.00
Short Interest 24.84%

Seattle Genetics, Inc., a biotechnology company, focuses on the development and commercialization of monoclonal antibody-based therapies for cancer.

7) MSC Industrial Direct Co. Inc. (NYSE:MSM)

Sector Services
Industry Industrial Equipment Wholesale
Market Cap $4.42B
Beta 1.23

MSM stock chart

Key Metrics

Current Ratio 5.20
Quick Ratio 2.84
Debt/Equity Ratio 0.00
Long Term Debt/Equity Ratio 0.00
Short Interest 3.11%

MSC Industrial Direct Co., Inc., together with its subsidiaries, operates as a direct marketer and distributor of metalworking and maintenance, repair, and operations (MRO) products to industrial customers in the United States. It offers approximately 600,000 stock-keeping units representing a range of MRO products, including cutting tools; measuring instruments; tooling components; metalworking products; fasteners; flat stock; raw materials; abrasives; machinery hand and power tools; safety and janitorial supplies; plumbing supplies; materials handling products; power transmission components; and electrical supplies. The company sells its products through its master catalogs, specialty and promotional catalogs, brochures, and the Internet to individual machine shops, Fortune 1000 companies, and government agencies, as well as markets to small, medium, and large companies in various sectors, including durable and non-durable goods manufacturing, education, government, and health care.

*Company profiles were sourced from Google Finance and Yahoo Finance. Financial data was sourced from Finviz on 08/22/2012.

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.