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Bet on These 4 Top-Performing Liquid Stocks for Solid Gains
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Liquidity indicates a company’s capability to meet debt obligations by converting its assets into liquid cash and equivalents. A company with adequate liquidity always has the potential to deliver higher returns, as stable financial resources can drive business growth.
Investors can consider adding four top-ranked stocks, Alnylam Pharmaceuticals, Inc. (ALNY - Free Report) , Frontdoor, Inc. (FTDR - Free Report) , EverQuote, Inc. (EVER - Free Report) and Sezzle Inc. (SEZL - Free Report) , to their portfolios to boost returns.
However, one should be careful about investing in a stock with a high liquidity level. High liquidity may also indicate that the company cannot utilize assets competently.
Besides sufficient cash in hand, an investor might also consider a company’s capital deployment abilities before investing in a stock. A healthy company with favorable liquidity may prove to be a profitable pick.
Measures to Identify Liquid Stocks
Current Ratio: It measures current assets relative to current liabilities. The ratio gauges a company’s potential to meet short- and long-term debt obligations. A current ratio — the working capital ratio — below 1 indicates that the company has more liabilities than assets. A high current ratio does not always suggest that the company is in good financial shape. It may also indicate that the firm failed to utilize its assets significantly. Hence, a range of 1-3 is considered ideal.
Quick Ratio: Unlike the current ratio, the quick ratio — the “acid-test ratio” or “quick assets ratio” — indicates a company’s ability to pay short-term obligations. It considers inventory, excluding current assets relative to current liabilities. A quick ratio of more than 1 is desirable, like the current ratio.
Cash Ratio: This is the most conservative ratio among the three, considering cash and cash equivalents and invested funds relative to current liabilities. It measures a company’s ability to meet existing debt obligations using the most liquid assets. Though a cash ratio of more than 1 may suggest sound financials, a higher number may indicate inefficiency in cash utilization.
A ratio greater than 1 is always desirable but may not always represent a company’s financial condition.
Screening Parameters
To pick the best of the lot, we have added asset utilization — a widely used measure of a company’s efficiency — as one of the screening criteria. Asset utilization is the ratio of total sales in the past 12 months to the last four-quarter average of total assets. Though this ratio varies across industries, companies with a ratio higher than their industries can be considered efficient.
We added our proprietary Growth Score to the screen to ensure these liquid and efficient stocks have solid growth potential.
Current Ratio, Quick Ratio, and Cash Ratio between 1 and 3: While liquidity ratios greater than 1 are desirable, significantly high ratios may indicate inefficiency.
Asset utilization is more significant than the industry average: Higher asset utilization than the industry average indicates a company’s efficiency.
Growth Score less than or equal to B: Back-tested results show that stocks with a Growth Score of A or B handily beat other stocks when combined with a Zacks Rank #1 or 2 (Buy).
These criteria have narrowed the universe of more than 7,700 stocks to only nine.
Here are four of the nine stocks that qualified the screen:
Alnylam Pharmaceuticals is a Cambridge, MA-based development-stage biopharmaceutical company focused on the development of novel therapeutics based on RNA interference (RNAi). The company’s pipeline of experimental RNAi therapeutics is focused across three strategic therapeutic areas (STArs) – genetic medicines, cardio-metabolic disease and hepatic infectious disease.
Alnylam’s approved drugs — Amvuttra, Givlaari and Oxlumo — have been witnessing strong uptake since launch. Leqvio helps Alnylam generate milestone payments from Novartis. It is working to expand Amvuttra’s indication to include cardiomyopathy of ATTR amyloidosis, which, if approved, could further boost sales.
Alnylam recently announced preliminary net product revenues for the fourth quarter and full-year 2024 for its approved products Onpattro, Amvuttra, Givlaari and Oxlumo. The company also issued its net product revenue guidance for 2025 and outlined several key products and pipeline updates for the year. Preliminary net product revenues for Givlaari and Oxlumo were around $65 million and $44 million, respectively, for the fourth quarter of 2024. For full-year 2024, preliminary net product revenues for Givlaari and Oxlumo were around $256 million and $167 million, respectively.
The Zacks Consensus Estimate for 2024 bottom line is pegged at a loss of 39 cents per share, unchanged in the past seven days. ALNY has a Growth Score of B and a trailing four-quarter earnings surprise of 65.67%, on average.
Frontdoor is the parent company of home service plan brands like American Home Shield, HSA, Landmark and OneGuard. The company's customizable home service plans help customers protect and maintain their homes from costly and unplanned breakdowns of essential home systems and appliances.
FTDR recently acquired 2-10 Home Buyers Warranty in an all-cash transaction for $585 million. This particular buyout diversifies Frontdoor’s portfolio and client base. It will also increase cross-selling opportunities for FTDR’s home warranties and on-demand services.
In the last reported quarter, revenues came in at $540 million, up 3% year over year. The uptick was driven by a 4% increase in price, which was partly offset by a 1% decline from reduced volume. Further, the number of first-year Direct-to-Consumer home warranties was 271,000, up 3% sequentially. Gross margin expanded 550 basis points to 57% in the third quarter of 2024. The expansion was mainly driven by higher price and a shift to higher service fees.
It also concluded a $400 million share repurchase authorization in August 2024 and initiated a new 3-year, $650 million buyback authorization in September 2024.
The Zacks Consensus Estimate for 2024 earnings is pegged at $3.15 per share, unchanged in past seven days. FTDR has a Growth Score of B and a trailing four-quarter earnings surprise of 269%, on average.
EverQuote, headquartered in Cambridge, MA, is an online insurance marketplace. The company's websites allow consumers to shop for auto, home, renters and life insurance.
EverQuote is gaining from its exclusive data assets and technology, deepened focus on core P&C markets and a robust financial profile. It is also focused on streamlining traffic operations, boosting AI-powered bidding solutions and rolling out advanced agent technology platforms. These position it well for long-term growth. Recovery in automotive and other insurance verticals, given auto carrier recovery and growth in revenue per quote request, bodes well. In the last reported quarter, total revenues of $144.5 million increased 163% year over year.
The Zacks Consensus Estimate for EVER’s 2024 earnings is pegged at 73 cents per share, unchanged in the past 30 days. The company has a Growth Score of A and a trailing four-quarter earnings surprise of 149.6%, on average.
Sezzle is a fintech company that operates a digital payment platform, mainly across the United States and Canada. This platform offers customers interest-free installment plans at online stores and certain in-store locations. In the last reported quarter, revenues jumped 71.3% year over year due to an increasing subscriber base. As of Sept. 30, 2024, SEZL had 529,000 active subscribers across the Anywhere and Premium platforms.
Management recently announced that it expects to exceed the top and bottom-line guidance for 2024 owing to strong holiday demand and the effective execution of strategic efforts. Earlier, the company had guided total revenue growth of 55% while earnings per share were expected to be $12.05. The Zacks Consensus Estimate for 2024 earnings is pegged at $9.85 per share, unchanged in the past seven days. The company has a Growth Score of B.
Get the remaining stocks on the list and start putting this and other ideas to the test. It can all be done with the Research Wizard stock picking and back testing software.
The Research Wizard is a great place to begin and easy to use. Everything is in plain language. And it's very intuitive. Start your Research Wizard trial today. And the next time you read an economic report, open up the Research Wizard, plug your finds in and see what gems come out.
Disclosure: Officers, directors and employees of Zacks Investment Research may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material. An affiliated investment advisory firm may own or have sold short securities and/or hold long and/or short positions in options mentioned in this material.
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Bet on These 4 Top-Performing Liquid Stocks for Solid Gains
Liquidity indicates a company’s capability to meet debt obligations by converting its assets into liquid cash and equivalents. A company with adequate liquidity always has the potential to deliver higher returns, as stable financial resources can drive business growth.
Investors can consider adding four top-ranked stocks, Alnylam Pharmaceuticals, Inc. (ALNY - Free Report) , Frontdoor, Inc. (FTDR - Free Report) , EverQuote, Inc. (EVER - Free Report) and Sezzle Inc. (SEZL - Free Report) , to their portfolios to boost returns.
However, one should be careful about investing in a stock with a high liquidity level. High liquidity may also indicate that the company cannot utilize assets competently.
Besides sufficient cash in hand, an investor might also consider a company’s capital deployment abilities before investing in a stock. A healthy company with favorable liquidity may prove to be a profitable pick.
Measures to Identify Liquid Stocks
Current Ratio: It measures current assets relative to current liabilities. The ratio gauges a company’s potential to meet short- and long-term debt obligations. A current ratio — the working capital ratio — below 1 indicates that the company has more liabilities than assets. A high current ratio does not always suggest that the company is in good financial shape. It may also indicate that the firm failed to utilize its assets significantly. Hence, a range of 1-3 is considered ideal.
Quick Ratio: Unlike the current ratio, the quick ratio — the “acid-test ratio” or “quick assets ratio” — indicates a company’s ability to pay short-term obligations. It considers inventory, excluding current assets relative to current liabilities. A quick ratio of more than 1 is desirable, like the current ratio.
Cash Ratio: This is the most conservative ratio among the three, considering cash and cash equivalents and invested funds relative to current liabilities. It measures a company’s ability to meet existing debt obligations using the most liquid assets. Though a cash ratio of more than 1 may suggest sound financials, a higher number may indicate inefficiency in cash utilization.
A ratio greater than 1 is always desirable but may not always represent a company’s financial condition.
Screening Parameters
To pick the best of the lot, we have added asset utilization — a widely used measure of a company’s efficiency — as one of the screening criteria. Asset utilization is the ratio of total sales in the past 12 months to the last four-quarter average of total assets. Though this ratio varies across industries, companies with a ratio higher than their industries can be considered efficient.
We added our proprietary Growth Score to the screen to ensure these liquid and efficient stocks have solid growth potential.
Current Ratio, Quick Ratio, and Cash Ratio between 1 and 3: While liquidity ratios greater than 1 are desirable, significantly high ratios may indicate inefficiency.
Asset utilization is more significant than the industry average: Higher asset utilization than the industry average indicates a company’s efficiency.
Zacks Rank equal to #1: Only Strong Buy-rated stocks can get through. You can see the complete list of today’s Zacks #1 Rank stocks here.
Growth Score less than or equal to B: Back-tested results show that stocks with a Growth Score of A or B handily beat other stocks when combined with a Zacks Rank #1 or 2 (Buy).
These criteria have narrowed the universe of more than 7,700 stocks to only nine.
Here are four of the nine stocks that qualified the screen:
Alnylam Pharmaceuticals is a Cambridge, MA-based development-stage biopharmaceutical company focused on the development of novel therapeutics based on RNA interference (RNAi). The company’s pipeline of experimental RNAi therapeutics is focused across three strategic therapeutic areas (STArs) – genetic medicines, cardio-metabolic disease and hepatic infectious disease.
Alnylam’s approved drugs — Amvuttra, Givlaari and Oxlumo — have been witnessing strong uptake since launch. Leqvio helps Alnylam generate milestone payments from Novartis. It is working to expand Amvuttra’s indication to include cardiomyopathy of ATTR amyloidosis, which, if approved, could further boost sales.
Alnylam recently announced preliminary net product revenues for the fourth quarter and full-year 2024 for its approved products Onpattro, Amvuttra, Givlaari and Oxlumo. The company also issued its net product revenue guidance for 2025 and outlined several key products and pipeline updates for the year. Preliminary net product revenues for Givlaari and Oxlumo were around $65 million and $44 million, respectively, for the fourth quarter of 2024. For full-year 2024, preliminary net product revenues for Givlaari and Oxlumo were around $256 million and $167 million, respectively.
The Zacks Consensus Estimate for 2024 bottom line is pegged at a loss of 39 cents per share, unchanged in the past seven days. ALNY has a Growth Score of B and a trailing four-quarter earnings surprise of 65.67%, on average.
Frontdoor is the parent company of home service plan brands like American Home Shield, HSA, Landmark and OneGuard. The company's customizable home service plans help customers protect and maintain their homes from costly and unplanned breakdowns of essential home systems and appliances.
FTDR recently acquired 2-10 Home Buyers Warranty in an all-cash transaction for $585 million. This particular buyout diversifies Frontdoor’s portfolio and client base. It will also increase cross-selling opportunities for FTDR’s home warranties and on-demand services.
In the last reported quarter, revenues came in at $540 million, up 3% year over year. The uptick was driven by a 4% increase in price, which was partly offset by a 1% decline from reduced volume. Further, the number of first-year Direct-to-Consumer home warranties was 271,000, up 3% sequentially. Gross margin expanded 550 basis points to 57% in the third quarter of 2024. The expansion was mainly driven by higher price and a shift to higher service fees.
It also concluded a $400 million share repurchase authorization in August 2024 and initiated a new 3-year, $650 million buyback authorization in September 2024.
The Zacks Consensus Estimate for 2024 earnings is pegged at $3.15 per share, unchanged in past seven days. FTDR has a Growth Score of B and a trailing four-quarter earnings surprise of 269%, on average.
EverQuote, headquartered in Cambridge, MA, is an online insurance marketplace. The company's websites allow consumers to shop for auto, home, renters and life insurance.
EverQuote is gaining from its exclusive data assets and technology, deepened focus on core P&C markets and a robust financial profile. It is also focused on streamlining traffic operations, boosting AI-powered bidding solutions and rolling out advanced agent technology platforms. These position it well for long-term growth. Recovery in automotive and other insurance verticals, given auto carrier recovery and growth in revenue per quote request, bodes well. In the last reported quarter, total revenues of $144.5 million increased 163% year over year.
The Zacks Consensus Estimate for EVER’s 2024 earnings is pegged at 73 cents per share, unchanged in the past 30 days. The company has a Growth Score of A and a trailing four-quarter earnings surprise of 149.6%, on average.
Sezzle is a fintech company that operates a digital payment platform, mainly across the United States and Canada. This platform offers customers interest-free installment plans at online stores and certain in-store locations. In the last reported quarter, revenues jumped 71.3% year over year due to an increasing subscriber base. As of Sept. 30, 2024, SEZL had 529,000 active subscribers across the Anywhere and Premium platforms.
Management recently announced that it expects to exceed the top and bottom-line guidance for 2024 owing to strong holiday demand and the effective execution of strategic efforts. Earlier, the company had guided total revenue growth of 55% while earnings per share were expected to be $12.05. The Zacks Consensus Estimate for 2024 earnings is pegged at $9.85 per share, unchanged in the past seven days. The company has a Growth Score of B.
Get the remaining stocks on the list and start putting this and other ideas to the test. It can all be done with the Research Wizard stock picking and back testing software.
The Research Wizard is a great place to begin and easy to use. Everything is in plain language. And it's very intuitive. Start your Research Wizard trial today. And the next time you read an economic report, open up the Research Wizard, plug your finds in and see what gems come out.
Click here to sign up for a free trial of the Research Wizard today.
Disclosure: Officers, directors and employees of Zacks Investment Research may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material. An affiliated investment advisory firm may own or have sold short securities and/or hold long and/or short positions in options mentioned in this material.
Disclosure: Performance information for Zacks’ portfolios and strategies is available at: https://www.zacks.com/performance.