7 Low-Debt And Liquid Small Cap Tech Stocks

by: ZetaKap

When a technology company of the small cap size has significant debt and minimal reserves, it sends a red flag to potential investors. Not only will they have obstacles to achieve growth, but they do not have the cash on hand when the unexpected occurs. To find small cap tech stocks that are well positioned for growth and ride out market fluctuations, we looked for companies with these two properties: minimal long-term debt and a stock load of cash. If these traits appeal to you, then you will like our list.

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 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 technology stocks. From here, we looked for companies that operate with little to no debt (D/E Ratio<.1). We then screened for businesses with a large amount of cash on hand (Current Ratio>2)(Quick Ratio>2).

Do you think these small-cap stocks are worth more than the market currently says? Use our list along with your own analysis.

1) Exar Corp. (NASDAQ:EXAR)

Sector Technology
Industry Semiconductor - Integrated Circuits
Market Cap $345.11M
Beta 0.64

EXAR stock chart

Key Metrics

Debt/Equity Ratio 0.02
Current Ratio 6.58
Quick Ratio 6.11
Short Interest 2.48%

Exar Corporation engages in the design, development, and marketing of high performance analog and mixed-signal integrated circuits (ICS) and sub-system solutions for data and telecommunications, networking and storage, industrial control, and consumer applications. The company offers a portfolio of products, including power management and connectivity components, communications products, storage optimization solutions, network security, and applied service processors. Its connectivity solutions comprise bridging products for bus interfaces, such as universal serial bus, Ethernet and peripheral interconnect express, and UART and serial transceiver devices; and communications products comprise plesiochronous digital hierarchy, synchronous optical network, and synchronous digital hierarchy products.

The company's products has applications in portable electronic devices, set top boxes, digital video recorders, networking and telecommunication systems, servers, enterprise storage systems, and industrial automation equipment. Exar Corporation sells its products through a direct sales force, independent sales representatives, non-exclusive distributors, and catalog distributors in the United States, as well as through the regional and country specific distributors internationally. The company was founded in 1971 and is headquartered in Fremont, California.

2) Cubic Corporation (NYSE:CUB)

Sector Technology
Industry Scientific & Technical Instruments
Market Cap $1.30B
Beta 0.89

CUB stock chart

Key Metrics

Debt/Equity Ratio 0.02
Current Ratio 2.22
Quick Ratio 2.06
Short Interest 3.02%

Cubic Corporation engages in the design, development, manufacture, integration, installation, operation, maintenance, and support of defense electronics and transportation fare collection systems worldwide. It operates through three segments: Cubic Transportation Systems, Cubic Defense Systems, and Mission Support Services. The Cubic Transportation Systems segment develops and delivers fare collection systems and turnkey services for public transit authorities. This segment offers hardware, software, and multiagency and multimodal transportation integration technologies, as well as provides operational services that allow agencies to collect fares, manage their operations, reduce fare evasion, and make using public transit.

The Cubic Defense Systems segment supplies live and virtual military training systems, and communication systems and products to the U.S. Department of Defense, other government agencies, and allied nations. This segment offers instrumented range systems for fighter aircraft, armored vehicles, and infantry force-on-force live training; weapons effects simulations; laser-based tactical and communication systems; precision gunnery solutions; multi-band communication tracking devices; and cross domain hardware solutions to address multi-level security requirements.

The Mission Support Services segment provides support services, including live, virtual, and constructive training; real-world mission rehearsal exercises; professional military education; intelligence support, information technology, information assurance, and related cyber support; development of military doctrine; consequence management, infrastructure protection, and force protection; risk mitigation services, and subject matter and operational expertise for law enforcement and homeland security clients; and support services related to field operations, force deployment and redeployment, and logistics. The company was founded in 1949 and is headquartered in San Diego, California.

3) Diodes Incorporated (NASDAQ:DIOD)

Sector Technology
Industry Semiconductor - Integrated Circuits
Market Cap $851.00M
Beta 2.14

DIOD stock chart

Key Metrics

Debt/Equity Ratio 0.07
Current Ratio 4.27
Quick Ratio 3.06
Short Interest 10.38%

Diodes Incorporated, together with its subsidiaries, designs, manufactures, and supplies application specific standard products in the discrete, logic, and analog semiconductor markets primarily in Asia, North America, and Europe. Its products include diodes, rectifiers, transistors, MOSFETs, protection devices, functional specific arrays, low voltage complementary metaloxidesemiconductor (CMOS) logic, high speed CMOS logic, amplifiers and comparators, and Hall-effect and magnetic resistance sensors. The company also offers power management devices, including LED drivers, DC-DC switching and linear voltage regulators, and voltage references; and special function devices, such as USB power switches, load switches, voltage supervisors, and motor controllers. It sells its products to the consumer electronics, computing, communications, industrial, and automotive industries through direct sales and marketing personnel, independent sales representatives, and distributors. Diodes Incorporated was founded in 1959 and is headquartered in Plano, Texas.

4) Nanometrics Incorporated (NASDAQ:NANO)

Sector Technology
Industry Scientific & Technical Instruments
Market Cap $351.91M
Beta 1.80

NANO stock chart

Key Metrics

Debt/Equity Ratio 0.03
Current Ratio 4.98
Quick Ratio 3.82
Short Interest 6.48%

Nanometrics Incorporated provides high-performance process control metrology systems used primarily in the fabrication of integrated circuits, high-brightness LEDs, data storage devices, and solar photovoltaics. It offers automated metrology systems that provide optical critical dimension, thin film metrology, and wafer stress for transistor and interconnect metrology applications; the Lynx cluster metrology platform for use in wafer metrology applications, including optical critical dimension, overlay, and thin film process control; and integrated metrology systems, which provide near real-time measurements.

The company's automated and integrated systems are also used in various process control applications, including dimension and film thickness measurement, device topography, and defect inspection, as well as used in the analysis of other film properties, such as optical, electrical, and material characteristics. Its process control solutions are deployed in the fabrication process from front-end-of-line substrate manufacturing to high-volume production of semiconductors and other devices, and to wafer-scale packaging applications. The company sells its metrology and inspection systems directly and through original equipment manufacturer channels to semiconductor manufacturers and equipment suppliers, and producers of high-brightness-LEDs, solar photovoltaics, data storage devices, silicon wafers, and photomasks worldwide. Nanometrics Incorporated was founded in 1975 and is headquartered in Milpitas, California.


Sector Technology
Industry Scientific & Technical Instruments
Market Cap $1.18B
Beta 1.41

IIVI stock chart

Key Metrics

Debt/Equity Ratio 0.02
Current Ratio 4.90
Quick Ratio 3.26
Short Interest 5.78%

II-VI Incorporated develops, refines, manufactures, and markets materials and derivative precision components and products worldwide. The company offers various precision infrared optical components, such as lenses, output couplers, windows, and mirrors for use in CO2 lasers; one micron laser components, including modular laser processing heads for fiber lasers, YAG lasers, and other one-micron laser systems; and beam delivery systems. It also provides near-infrared optics comprising waveplates, polarizers, lenses, prisms, and mirrors for visible and near-infrared applications; coated windows, which are used as debris shields in the industrial and medical laser aftermarkets; fiber and micro optics, optical components and functional modules, and photonic crystal parts for optical communications; optical and photonic crystal parts for instrumentation and laser applications; diode pumped solid-state laser devices for optical instruments, display, and biotechnology; and components for UV filters used in early warning missile detection.

In addition, it offers military infrared optics, including missile domes, electro-optical windows and subassemblies, imaging lenses, and other components; visible and crystalline materials, such as calcium and barium fluoride, and fused silica; material processing and refinement products, such as selenium and tellurium metals, and chemicals; thermoelectric modules (TEMs) comprising single-stage TEMs, micro TEMs, multi-stage TEMs, planar multi-stage TEMs, extended life thermocyclers, thermoelectric thermal reference sources, power generators, and thermoelectric assemblies for use in defense, medical equipment, industrial, and commercial applications; and silicon carbide products consisting of 6H-SiC semi-insulating and 4H-SiC conducting poly-types. The company markets its products through a direct sales force, and representatives and distributors. II-VI Incorporated was founded in 1971 and is headquartered in Saxonburg, Pennsylvania.

6) Rofin-Sinar Technologies Inc. (NASDAQ:RSTI)

Sector Technology
Industry Scientific & Technical Instruments
Market Cap $625.53M
Beta 1.78

RSTI stock chart

Key Metrics

Debt/Equity Ratio 0.03
Current Ratio 3.88
Quick Ratio 2.02
Short Interest 5.35%

Rofin-Sinar Technologies Inc., together with its subsidiaries, engages in the design, development, engineering, manufacturing, and marketing of laser-based products worldwide. The company offers laser macro products to machine tool and automotive markets for cutting and welding of metals. It also provides laser marking products to semiconductor and electronics markets for the marking of integrated circuits, wafers, solar cells, electronic components, and smart cards, as well as to automotive markets for the marking of labels and car components. In addition, the company offers laser micro products for fine welding, fine cutting, micro structuring, and drilling applications in medical devices, semiconductor and electronics, photovoltaic, dental, and jewelry markets; and for perforating and scribing of paper and foils in packaging and paper industries. Further, it provides components to laser industry. The company sells its products in approximately 65 countries to original equipment manufacturers, systems integrators, and industrial end-users. Rofin-Sinar Technologies Inc. was founded in 1975 and is based in Plymouth, Michigan.


Sector Technology
Industry Communication Equipment
Market Cap $1.33B
Beta 1.26

ADTN stock chart

Key Metrics

Debt/Equity Ratio 0.07
Current Ratio 4.01
Quick Ratio 3.10
Short Interest 11.37%

ADTRAN, Inc. designs, manufactures, markets, and services communications network solutions that enable voice, data, video, and Internet communications across wireline and wireless networks worldwide. Its Carrier Networks division provides fiber and copper-based solutions for service providers to deliver voice, data, and video services to customers' premises and mobile network cell sites. Its products enable services, such as voice, VoIP, IP television, RF video, high speed Internet access, and data services based upon Ethernet, frame relay, TDM, and ATM networks, connecting the network with user components, such as switches, routers, gateways, integrated access devices (IADs), private branch exchanges (PBXs), and telephone key systems. This division serves local exchange carriers, independent operating companies, competitive local exchange carriers, utilities, municipalities, cable MSOs, international carriers, and wireless service providers.

The company's Enterprise Networks division provides Internetworking solutions for enterprise customers to construct voice, data, and video networks within their sites or among distributed sites. It offers Internetworking solutions, including IP business gateways, optical network terminals, virtual wireless LAN products, multi-service routers, managed Ethernet switches, IP PBX products, IP phone products, unified communications and unified threat management solutions, and carrier Ethernet network terminating equipment, as well as provides IADs. This division serves the retail, food service, healthcare, finance, government, education, manufacturing, military, transportation, hospitality, and energy/utility markets. ADTRAN, Inc. also provides digital data service and integrated services digital network products, high bit-rate digital subscriber line products, T1/E1/T3, channel service units/data service units, and fixed wireless products. The company was founded in 1985 and is headquartered in Huntsville, Alabama.

*Company profiles were sourced from Google Finance and Yahoo Finance. Financial data was sourced from Finviz on August 25, 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.