7 Cash-Loaded Tech Stocks With Strong Earnings

by: ZetaKap

Just because a technology company has developed a product or device that has gained consumer favor does not mean that it is a great investment. The more preferable opportunities are with companies that also understand all aspects of running a successful business. For our scan today, we reviewed tech stocks that have two assets that speak to fiscal management: strong profits and a substantial cash reserve. Together, these two traits dial down the risk that can accompany tech stocks and point in the direction of companies with business acumen. If profitable tech companies with high liquidity pique your interest, you will enjoy reviewing the list below.

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).

The Operating Profit Margin is a profitability ratio that measures the effectiveness of the company's operating efficiency. This metric allows investors to see how much profit is left after all variable costs are covered. If the company's margin is increasing over time, this means that its earning more per dollar of sales. Finding trends in the Operating Profit Margin helps investors identify companies that are improving profitability over time and managing the economic landscape better than competitors.

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 technology stocks. Next, we screened for businesses that have a substantial amount of cash on hand (Current Ratio>2)(Quick Ratio>2). We then screened for businesses with strong profit margins (1-year operating margin>15%)(ROA [TTM]>10%). We did not screen out any market caps.

Do you think these stocks will perform well? Use our list, along with your own analysis.

1) Altera Corp. (NASDAQ:ALTR)

Sector Technology
Industry Semiconductor - Specialized
Market Cap $11.75B
Beta 1.14

ALTR stock chart

Key Metrics

Current Ratio 6.17
Quick Ratio 5.92
Operating Profit Margin 34.85%
Return on Assets 13.97%
Short Interest 2.32%

Altera Corporation, a semiconductor company, designs, manufactures, and markets programmable logic devices, HardCopy application-specific integrated circuit devices, pre-defined design building blocks, and associated development tools. It serves customers primarily in the telecom and wireless, industrial automation, military and automotive, networking, and computer and storage markets. The company markets its products in the Americas, the Asia Pacific, Europe, the Middle East, Africa, and Japan through a network of distributors, independent sales representatives, and direct sales personnel. Altera Corporation was founded in 1983 and is headquartered in San Jose, California.

2) Hittite Microwave Corporation (NASDAQ:HITT)

Sector Technology
Industry Semiconductor - Integrated Circuits
Market Cap $1.77B
Beta 0.94

HITT stock chart

Key Metrics

Current Ratio 27.25
Quick Ratio 24.17
Operating Profit Margin 42.63%
Return on Assets 15.73%
Short Interest 5.72%

Hittite Microwave Corporation designs, develops, and sells integrated circuits, modules, subsystems, and instrumentation products for radio frequency microwave and millimeterwave applications worldwide. Hittite Microwave Corporation was founded in 1985 and is headquartered in Chelmsford, Massachusetts.


Sector Technology
Industry Semiconductor - Specialized
Market Cap $283.13M
Beta 0.67

NVEC stock chart

Key Metrics

Current Ratio 9.95
Quick Ratio 8.70
Operating Profit Margin 51.03%
Return on Assets 13.79%
Short Interest 3.79%

NVE Corporation engages in the development and sale of devices that use spintronics, a nanotechnology, which relies on electron spin to acquire, store, and transmit information. The company manufactures high-performance spintronic products, including sensors and couplers that are used to acquire and transmit data. NVE Corporation was founded in 1982 and is headquartered in Eden Prairie, Minnesota.

4) Linear Technology Corp. (NASDAQ:LLTC)

Sector Technology
Industry Semiconductor - Specialized
Market Cap $7.75B
Beta 1.09

LLTC stock chart

Key Metrics

Current Ratio 8.83
Quick Ratio 8.36
Operating Profit Margin 45.70%
Return on Assets 23.11%
Short Interest 2.15%

Linear Technology Corporation, together with its subsidiaries, designs, manufactures, and markets various analog integrated circuits worldwide. The company produces power management, data conversion, signal conditioning, Module subsystems, and wireless sensor network products, as well as radio frequency and interface ICs. Linear Technology Corporation sells its products primarily through direct sales staff and electronics distributors. The company was founded in 1981 and is headquartered in Milpitas, California.

5) Ultratech, Inc. (NASDAQ:UTEK)

Sector Technology
Industry Semiconductor Equipment & Materials
Market Cap $856.07M
Beta 0.82

UTEK stock chart

Key Metrics

Current Ratio 6.11
Quick Ratio 5.32
Operating Profit Margin 22.56%
Return on Assets 12.02%
Short Interest 2.82%

Ultratech, Inc. develops, manufactures, and markets photolithography and laser thermal processing equipment. The company was founded in 1979 and is headquartered in San Jose, California.

6) QLogic Corp. (NASDAQ:QLGC)

Sector Technology
Industry Semiconductor - Integrated Circuits
Market Cap $1.14B
Beta 1.33

QLGC stock chart

Key Metrics

Current Ratio 8.12
Quick Ratio 7.84
Operating Profit Margin 20.87%
Return on Assets 12.47%
Short Interest 5.42%

QLogic Corporation designs and supplies network infrastructure products that provide, enhance, and manage computer data communication. It designs and develops application-specific integrated circuits, adapters, and switches based on fiber channel, Internet small computer systems interface, Fiber Channel over Ethernet, and Ethernet technologies. QLogic Corporation was founded in 1992 and is headquartered in Aliso Viejo, California.

7) Analog Devices Inc. (NASDAQ:ADI)

Sector Technology
Industry Semiconductor - Integrated Circuits
Market Cap $12.05B
Beta 1.10

ADI stock chart

Key Metrics

Current Ratio 8.97
Quick Ratio 8.36
Operating Profit Margin 31.01%
Return on Assets 12.24%
Short Interest 1.99%

Analog Devices, Inc. engages in the design, manufacture, and marketing of analog, mixed-signal, and digital signal processing integrated circuits used in industrial, automotive, consumer, and communication applications. The company's signal processing products involve in converting, conditioning, and processing real-world phenomena, such as temperature, pressure, sound, light, speed, and motion into electrical signals. The company was founded in 1965 and is headquartered in Norwood, Massachusetts.

*Company profiles were sourced from Google Finance and Yahoo Finance. Financial data was sourced from Finviz on 09/24/2012.

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.