6 Low-Debt Mid-Cap Stocks Bringing In Profits

by: ZetaKap

Many investors prefer stocks at the mid-cap level because these companies tend to be more established and experienced. Companies of this size have gone through growth spurts, plateaus and even downturns. To find mid-cap stocks that appear to have sound financial infrastructure, we focused on two key elements: profitability and minimal debt. Having relatively little debt is a positive attribute not to be overlooked, as many companies have gotten in too deep with debt to remain focused on growth. Strong profits point to companies that have been able to keep the bottom line a priority as they expand. See the list of mid-cap stocks below to see if any meet your standards.

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 with its available capital. By using this ratio, investors can identify the amount of leverage utilized by a specific company and compare it with 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.

Return on Equity [ROE] is one way to identify great potential names relative to profitability. This ratio illustrates the percentage return on shareholder equity. As well, this metric segments the company into operational efficiency, asset use efficiency, and financial leverage. Why does this matter? Simply put, it allows investors to get a real picture of how the company is generating these returns and helps identify parts of the company that may be underperforming.

Return on Assets [ROA] illustrates how much a company is generating in earnings from its assets alone. This metric gives investors a picture of how profitable the company is relative to the assets in current possession. As well, it lets investors see how efficient and effective management is at generating earnings from the company's assets. While most management teams can probably make money by throwing money at an issue very few can make very large profits with little investment.

We first looked for mid-cap stocks. From here, we then looked for companies that operate with little to no long term debt (Long Term D/E Ratio<.1). We then looked for businesses that operate with little to no debt (D/E Ratio<.1). We then screened for businesses that have been able to maintain a sound level of profitability for shareholders (ROE [TTM]>30%)(ROA [TTM]>10%). We did not screen out any sectors.

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

1) AOL, Inc. (NYSE:AOL)

Sector Technology
Industry Internet Information Providers
Market Cap $3.15B
Beta -

AOL stock chart

Key Metrics

Long Term Debt/Equity Ratio 0.02
Debt/Equity Ratio 0.03
Return on Equity 37.00%
Return on Assets 29.96%
Short Interest 11.58%

AOL Inc. operates as a Web services company that offers a suite of brands and offerings for the worldwide audience. Its business spans online content, products and services for consumers, publishers and advertisers. The company provides content produced by journalists from new and traditional media, freelance writers and bloggers, and licensed content from third parties, as well as aggregations of user-generated content through sites such as The Huffington Post, The Huffington Post Women, The Huffington Post Parents, and The Huffington Post Black Voices. It also operates Patch, a community-specific news and information platform that provides local coverage information for individual towns and communities; and MapQuest, which offers online mapping and directions services, as well as provides local directory listings through its AOL Yellow Pages product.

In addition, the company offers search and contextual, online advertising, display advertising, and Internet access subscription services and AOL Mail and AIM, which are e-mail and instant messaging services. AOL Inc. was founded in 1985 and its headquarters is in New York, New York.

2) Administradora de Fondos de Pensiones Provida SA (NYSE:PVD)

Sector Financial
Industry Diversified Investments
Market Cap $2.00B
Beta 1.22

PVD stock chart

Key Metrics

Long Term Debt/Equity Ratio 0.00
Debt/Equity Ratio 0.00
Return on Equity 30.46%
Return on Assets 23.63%
Short Interest 0.08%

Administradora de Fondos de Pensiones Provida S.A. offers private pension fund administration and related services in the Republic of Chile. Its services include collection for individual capitalization accounts, voluntary savings accounts, voluntary pension savings, life and disability benefits, investment services, and accounts administration. The company also holds investments in private pension fund administrators operating in Peru, Ecuador, Mexico, and the Dominican Republic. As of June 30, 2005, it operated 134 branches. The company was incorporated in 1981 and is headquartered in Santiago, Chile. Administradora de Fondos de Pensiones Provida SA operates as a subsidiary of Banco Bilbao Vizcaya Argentaria, Chile S.A.

3) FactSet Research Systems Inc. (NYSE:FDS)

Sector Technology
Industry Information & Delivery Services
Market Cap $4.18B
Beta 1.20

FDS stock chart

Key Metrics

Long Term Debt/Equity Ratio 0.00
Debt/Equity Ratio 0.00
Return on Equity 32.50%
Return on Assets 26.27%
Short Interest 11.60%

FactSet Research Systems Inc. provides financial and economic information. The company offers fundamental financial data on various companies, analytical applications, and client services to the portfolio managers, research and performance analysts, risk managers, marketing professionals, sell-side equity research professionals, investment bankers, and fixed income professionals.

FactSet's applications provide users access to company analysis, multicompany comparisons, industry analysis, company screening, portfolio analysis, predictive risk measurements, alphatesting, portfolio optimization and simulation, news and quotes, and tools to value and analyze fixed income securities and portfolios. The company combines commercial databases, including content regarding companies and securities from various markets into a single online platform of information and analytics. FactSet's solutions for investment management professionals include equity analysis; offering applications for portfolio attribution, risk management, and quantitative analysis; building quant models and calculating risk; following global economic events; analyzing the debt-driven market; integrating data, such as portfolio holdings; and creating reports and presentations.

The company's solutions for banking and brokerage professionals comprise creating models and presentations; tracking market performance and headlines; providing deal analytic and corporate governance services; researching on public and private companies; auditing financials underlying SEC filings and annual reports; and providing access to reports through wireless handheld device. FactSet was founded in 1978 and its headquarters is in Norwalk, Connecticut.

4) Rollins Inc. (NYSE:ROL)

Sector Services
Industry Business Services
Market Cap $3.44B
Beta 0.55

ROL stock chart

Key Metrics

Long Term Debt/Equity Ratio 0.00
Debt/Equity Ratio 0.00
Return on Equity 32.61%
Return on Assets 16.27%
Short Interest 1.60%

Rollins, Inc., through its subsidiaries, provides pest and termite control services to residential and commercial customers in the United States, Canada, Central America, the Caribbean, the Middle East, Asia, the Mediterranean, Europe, and Africa. The company offers pest control services, and protection against termite damage, rodents, and insects to homes, as well as to hotels, food service establishments, food manufacturers, retailers, and transportation companies. It also provides pest management and sanitation services and products to the food and commodity industries. The company was founded in 1948 and is headquartered in Atlanta, Georgia.

5) CH Robinson Worldwide Inc. (NASDAQ:CHRW)

Sector Services
Industry Air Delivery & Freight Services
Market Cap $9.14B
Beta 0.66

CHRW stock chart

Key Metrics

Long Term Debt/Equity Ratio 0.00
Debt/Equity Ratio 0.00
Return on Equity 34.65%
Return on Assets 20.06%
Short Interest 4.42%

C.H. Robinson Worldwide, Inc., a third-party logistics company, provides freight transportation services and logistics solutions to companies in various industries worldwide. It offers transportation and logistics services as well as transportation management, customs brokerage, and warehousing services through contractual relationships with approximately 53,000 transportation companies, including motor carriers, railroads, air freight carriers, and ocean carriers.

The company also engages in buying, selling, and marketing fresh produce. It offers its fresh produce to grocery retailers, restaurants, produce wholesalers, and food service distributors through a network of independent produce growers and suppliers under the Fresh 1, Tomorrow's Organics, Rosemont Farms, Melon Up, Tropicana, Welch's, Mott's, and Glory Foods names. In addition, the company provides payment management and business intelligence services, such as funds transfer, fuel purchasing, and online expense management primarily to motor carrier companies and fuel distributors. It operates through a network of 235 branch offices in North America, Europe, Asia, South America, Australia, and the Middle East. C.H. Robinson Worldwide, Inc. was founded in 1905 and its headquarters is in Eden Prairie, Minnesota.

6) Pier 1 Imports, Inc. (NYSE:PIR)

Sector Services
Industry Home Furnishing Stores
Market Cap $2.04B
Beta 4.30

PIR stock chart

Key Metrics

Long Term Debt/Equity Ratio 0.02
Debt/Equity Ratio 0.02
Return on Equity 38.67%
Return on Assets 22.37%
Short Interest 8.94%

Pier 1 Imports, Inc., together with its subsidiaries, operates as an importer and specialty retailer of imported decorative home furnishings and gifts primarily in the United States and Canada. It sells various decorative accessories, such as decorative accents, lamps, vases, dried and artificial flowers, baskets, ceramics, dinnerware, bath and fragrance products, candles, seasonal, and gift items.

The company also offers furniture and furniture cushions; wall decorations and mirrors; and dining and kitchen goods. As of February 25, 2012, it operated 971 stores in the United States and 81 stores in Canada under the Pier 1 Imports brand name. The company also supplies merchandise and licenses the Pier 1 Imports name to sell its merchandise primarily in a store within a store format in Mexico and El Salvador. Pier 1 Imports, Inc. was founded in 1970 and its headquarters is in Fort Worth, Texas.

Company profiles were sourced from Google Finance and Yahoo Finance. Financial data was sourced from Finviz on 09/05/2012.

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.