3 Low-Debt Industrial Metals And Minerals Stocks Maintaining Great Liquidity

Includes: DNN, RVM, UAMY
by: ZetaKap

Companies that specialize in resource extraction require fleets of expensive heavy equipment and mine areas that often have little accessibility. This type of endeavor requires substantial funding to maintain operations. It is not surprising that many companies in the industrial metals and minerals space find it necessary to leverage their assets to keep the company going during dry spells. But we all know that too much debt can be a detriment in the long run. To find industrial metals and minerals companies that have a sound capital structure, we searched for two traits: liquidity and minimal long-term debt. These two qualities speak to a company that has maintained strong financial control along the way and is poised for growth as well as overcoming challenges. Use the list of industrial metals and minerals stocks below to start your own evaluation.

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 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.

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.

We first looked for industrial metals and minerals stocks. We then looked for businesses that have strong liquidity (Current Ratio>2)(Quick Ratio>2). We then looked for companies that operate with little to no long-term debt (Long Term D/E Ratio<0.1). We then screened for businesses that have maintained a sound capital structure (D/E Ratio<0.1). We did not screen out any market caps.

Do you think these stocks will break through to new highs? Please use our list to assist with your own analysis.

1) Denison Mines Corp. (NYSEMKT:DNN)

Sector Basic Materials
Industry Industrial Metals & Minerals
Market Cap $534.68M
Beta 3.02

DNN stock chart

Key Metrics

Current Ratio 8.55
Quick Ratio 8.29
Long-Term Debt/Equity Ratio 0.00
Debt/Equity Ratio 0.00
Short Interest 1.66%

Denison Mines Corp. engages in the exploration, development, mining, and milling of uranium primarily in the United States and Canada. It also produces vanadium as a co-product from its mines located in Colorado and Utah; and recycles uranium-bearing waste materials. The company's principal properties in the United States include the Arizona Strip uranium properties in north central Arizona; the Colorado Plateau uranium/vanadium properties located to the southwestern Colorado and southeastern Utah border; the Daneros mine and exploration properties in the White Canyon district in southeastern Utah; and the Henry Mountains Complex uranium properties in south central Utah.

Its primary properties in Canada comprise the Midwest uranium project, the Wheeler River project, the Moore Lake property, the Park Creek property, the Wolly project, and various other wholly owned and joint ventured exploration properties located in Saskatchewan. The company also owns interest in gold prospect at Talbot Lake in Ontario. In addition, it holds interests in 181,574 hectares of uranium exploration properties in Mongolia; and 2 mining licenses totaling 457,300 hectares in the southern part of Zambia.

Further, the company provides post-closure mine care and maintenance services, as well as mine decommissioning services to industry and government. Denison Mines Corp. sells its vanadium as a vanadium pentoxide and as a ferrovanadium to industry end users and trading companies. The company was formerly known as International Uranium Corporation and changed its name to Denison Mines Corp. in December 2006. Denison Mines Corp. was founded in 1996 and is headquartered in Toronto, Canada.

2) Revett Minerals Inc. (NYSEMKT:RVM)

Sector Basic Materials
Industry Industrial Metals & Minerals
Market Cap $104.01M
Beta 1.33

RVM stock chart

Key Metrics

Current Ratio 4.71
Quick Ratio 4.17
Long-Term Debt/Equity Ratio 0.02
Debt/Equity Ratio 0.03
Short Interest 3.27%

Revett Minerals Inc., through its subsidiaries, engages in the exploration of copper and silver properties in the United States. Its principal properties include the Troy mine, an underground copper and silver deposit that comprises 24 patented lode-mining claims and 511 unpatented lode-mining claims covering approximately 850 acres of fee land and 356 acres of patented claim land in Lincoln County, Montana; and the Rock Creek project, a development-stage copper and silver deposit, which comprises 99 patented lode-mining claims, 370 unpatented lode-mining claims, 5 tunnel site claims, and 85 mill site claims with 1,427 acres of fee land located in Sanders County, Montana. The company was incorporated in 2004 and is based in Spokane Valley, Washington.

3) United States Antimony Corp. (NYSEMKT:UAMY)

Sector Basic Materials
Industry Industrial Metals & Minerals
Market Cap $160.68M
Beta 1.14

UAMY stock chart

Key Metrics

Current Ratio 4.56
Quick Ratio 3.71
Long-Term Debt/Equity Ratio 0.01
Debt/Equity Ratio 0.03
Short Interest 9.97%

United States Antimony Corporation engages in the production and sale of antimony and zeolite products in the Untied States. The company offers antimony oxide that is primarily used in conjunction with a halogen to form a synergistic flame retardant system for plastics, rubber, fiberglass, textile goods, paints, coatings, and paper. Its antimony oxide is also used as a color fastener in paints; as a catalyst for the production of polyester resins for fibers and films; as a phosphorescent agent in fluorescent light bulbs; and as an opacifier for porcelains.

The company also offers various grades of Sodium antimonite for use as a fining agent for glass in cathode ray tubes in television picture tubes, as well as a flame retardant; and antimony metal for use in bearings, storage batteries, and ordnance. In addition, it offers zeolite for various applications, including soil amendment and fertilization, water filtration, sewage treatment, nuclear waste and other environmental cleanup, odor control, gas separation, and animal nutrition. The company was founded in 1968 and is based in Thompson Falls, Montana.

*Company profiles were sourced from Google Finance and Yahoo Finance. Financial data was sourced from Finviz on 08/31/2012.

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.