When we first hear about a company and learn that it is growing quickly, to the casual observer it may seem like the business was started recently. But in most instances, the founders and employees have been working hard for a long time and the new found attention can take everyone by surprise. That is why it is key for companies with projected EPS growth rates above 25% for the next year to have a sound capital structure. When a company wants to grow, it is essential that any debt they may have is manageable and does not compete with expansion strategies. To find technology companies with these qualities, we searched for stocks at the mid cap level and ran a scan to find those that are projected for high growth and have minimal debt. To learn more, take a look at the graphs and summaries below.
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.
EPS growth (earnings per share growth) illustrates the growth of earnings per share over time. The 1-Year Expected EPS Growth Rate is an annual growth estimate, where the growth projections are made by analysts, the company or other credible sources.
We first looked for mid cap technology stocks. We then looked for companies that have maintained a sound long term capital structure (Long Term D/E Ratio<.1). From here, we then looked for companies that have expected earnings per share growth of more than 25 percent for next year(1-year projected EPS Growth Rate>25%).
Do you think these mid-cap stocks will perform well? Use our list to help with your own analysis.
1) Research In Motion Limited (RIMM)
|Industry||Diversified Communication Services|
|Long Term Debt/Equity Ratio||0.00|
|1-Year Projected Earnings Per Share Growth Rate||58.60%|
Research In Motion Limited designs, manufactures, and markets wireless solutions for the mobile communications market worldwide. The company's products include BlackBerry smartphones and accessories, including bundles, cases, audio and memory products, Bluetooth, chargers, batteries and doors, and card readers; SureType, a keyboard technology, which allows users to compose messages using single-handed operation or two-handed thumb-typing; and SurePress, a touch screen that helps in navigation and typing. Its products provide access to time-sensitive information, including email, phone, short messaging service, and Internet and intranet-based applications.
The company's products also enable third party developers and manufacturers to enhance their products and services with wireless connectivity to data. Research In Motion Limited markets and sells its products directly, as well as through strategic partners and distribution channels. It has a strategic alliance with Hewlett-Packard Company to deliver a portfolio of solutions for business mobility on the BlackBerry platform. The company was founded in 1984 and is headquartered in Waterloo, Canada with additional offices in North America, Europe, and the Asia Pacific.
2) Qihoo 360 Technology Co. Ltd (NYSE:QIHU)
|Industry||Internet Service Providers|
|Long Term Debt/Equity Ratio||0.00|
|1-Year Projected Earnings Per Share Growth Rate||53.52%|
Qihoo 360 Technology Co. Ltd. provides Internet and mobile security products in the People's Republic of China. Its principal products include 360 Safe Guard, an Internet security product for Internet security and system optimization; 360 Anti-Virus, an anti-virus application to protect users' computers against trojan horses, viruses, worms, adware, and other forms of malware; and 360 Mobile Safe, a security program for the Google Android, Apple iOS, and Nokia Symbian smartphone operating systems. The company's platform products comprise 360 Safe Browser, a Web browser; 360 Personal Start-up Page, a default homepage of 360 Safe Browser and a key access point to popular and preferred information and applications; 360 Application Store, a key access point to securely obtain and manage software and applications; and 360 Safebox, a solution that protects users against thefts of personal account information.
It also provides online advertising services, including online marketing services and search referral services; and Internet value-added services comprising the operation of Web games developed by third-parties, remote technical support, and cloud-based services. Qihoo 360 Technology Co. Ltd. has strategic partnership with China Network Television. The company was formerly known as Qihoo Technology Company Limited and changed its name to Qihoo 360 Technology Co. Ltd. in December 2010. Qihoo 360 Technology Co. was founded in 2005 and is based in Beijing, the People's Republic of China.
3) Cepheid (NASDAQ:CPHD)
|Industry||Scientific & Technical Instruments|
|Long Term Debt/Equity Ratio||0.01|
|1-Year Projected Earnings Per Share Growth Rate||1200.00%|
Cepheid, a molecular diagnostics company, engages in developing, manufacturing, and marketing integrated systems for testing in the clinical market, as well as for application in legacy biothreat, industrial, and partner markets. Its systems enable molecular testing for organisms and genetic-based diseases by automation. The company offers GeneXpert system that integrates sample preparation in addition to DNA amplification and detection; and SmartCycler system, which integrates DNA amplification and detection to allow rapid analysis of a sample. The GeneXpert system is designed for reference laboratories, hospital central laboratories, and satellite testing locations, such as emergency departments and intensive care units within hospitals and doctors' offices. Cepheid also provides GeneXpert Infinity System for high volume testing.
The company offers tests for the GeneXpert and the SmartCycler systems in the areas of healthcare associated infections, critical infectious disease, genetics, women's health, and oncology. These tests include U.S. Food and Drug Administration (FDA) cleared products, CE marked products, analyte specific reagents, and research use only tests in the clinical market. In the industrial market, it sells its SmartCycler system along with general use polymerase chain reaction reagents and reaction tubes. Cepheid sells its products its direct sales force and through third-party distributors worldwide. It has collaboration agreements with Novartis, Foundation for Innovative New Diagnostics, Life Technologies Corporation, and Northrop Grumman Corporation. The company was founded in 1996 and is headquartered in Sunnyvale, California.
*Company profiles were sourced from Google Finance and Yahoo Finance. Financial data was sourced from Finviz on 09/06/2012.
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.