We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
4 Top-Ranked Liquid Stocks To Watch Out for Fat Returns in 2022
Read MoreHide Full Article
Liquidity determines a company’s ability to meet debt obligations by converting assets into liquid cash and equivalents. Robust liquidity levels support business growth. Adding stocks with favorable liquidity to the portfolio is likely to work in favor of investors seeking healthy returns.
However, one should be alert before investing in such stocks. While a high liquidity level may imply that the company is clearing its dues at a faster rate compared with peers, this may also suggest that it is unable to utilize assets competently.
Hence, one may consider a company’s efficiency level and its liquidity for identifying potential winners.
Measures to Identify Liquid Stocks
Current Ratio: It measures current assets relative to current liabilities. This ratio is used for measuring a company’s potential to meet short- and long-term debt obligations. A current ratio — also known as the working capital ratio — below 1 indicates that the company has more liabilities than assets. However, a high current ratio does not always indicate that the company is in good financial shape. It may also that the company failed to utilize its assets significantly. Hence, a range of 1-3 is considered ideal.
Quick Ratio: Unlike the current ratio, the quick ratio — also called the “acid-test ratio" or the "quick assets ratio" — reflects on a company’s ability to pay short-term obligations. It considers inventory excluding the current assets relative to current liabilities. Like the current ratio, a quick ratio of more than 1 is desirable.
Cash Ratio: This is the most conservative ratio among the three, as it takes into account cash and cash equivalents as well as invested funds relative to current liabilities. It measures a company’s ability to meet current debt obligations using the most liquid assets. Though a cash ratio of more than 1 may point toward sound financials, a higher number may indicate inefficiency in cash utilization.
A ratio greater than 1 is desirable at all times 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 respective industries can be considered efficient.
To ensure that these liquid and efficient stocks have solid growth potential, we have added our proprietary Growth Style Score to the screen.
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 greater 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 when combined with a Zacks Rank #1 or 2 handily beat other stocks.)
These criteria have narrowed down the universe of more than 7,700 stocks to only six.
Here are four of the six stocks that qualified the screen:
Headquartered in Menomonee Falls, WI, Kohl’s Corporation (KSS - Free Report) is a department store chain that operates specialty department stores and an e-commerce site in the United States. The company offers moderately-priced apparel, footwear and accessories for women, men and children, beauty and home articles. Kohl’s appeals to middle-class consumers as it sells discounted branded and private-label clothing and home goods. As of Oct 30, 2021, Kohl’s operated more than 1,100 stores across 49 states, as well as online at Kohl's.com and on the Kohl's app. The Zacks Consensus Estimate for fiscal 2021 earnings is pegged at $7.30 per share, up 21.1% in the past 60 days. Kohl’s has a Growth Score of A and a trailing four-quarter earnings surprise of 114.5%, on average.
Kearney, NE-based Buckle (BKE - Free Report) is a well-known retailer that sells a wide array of brand names and private label casual apparel, including tops, denim and other casual bottoms, sportswear, outerwear, accessories and footwear. Buckle emphasizes on personalized attention to its clients and offers individual customer services such as free alterations, layaways and a loyalty program. The Zacks Consensus Estimate for its fiscal 2021 earnings is pegged at $4.76 per share, up 12.3% in the past 60 days. The company has a Growth Score of B and a trailing four-quarter earnings surprise of 42.8%, on average.
Based in Phoenix, AZ, Cavco Industries (CVCO - Free Report) designs and manufactures factory-built housing structures. The company’s products are sold under brand names like Cavco Homes, Palm Harbor Homes, Friendship Homes, Fleetwood Homes, Fairmont Homes and Chariot Eagle, among others. Cavco Industries is one of the prominent producers of park model RVs, vacation cabins and modular homes. The Zacks Consensus Estimate for 2022 earnings is pegged at $13.71 per share, up 17.2% in the past 60 days. The company has a Growth Score of A and a trailing four-quarter earnings surprise of 30.5%, on average.
Based in Colorado Springs, CO, Century Casinos (CNTY - Free Report) is a well-known casino entertainment company. The company’s operations are mainly located in United States and Canada. Century Casinos holds a 66.6% ownership stake in Casinos Poland through its Austrian subsidiary. The Zacks Consensus Estimate for 2021 earnings is pegged at 75 cents per share, up 25% in the past 60 days. The company has a Growth Score of A and a trailing four-quarter earnings surprise of 758.9%, on average.
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. It's 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/or 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 that are mentioned in this material.
Image: Bigstock
4 Top-Ranked Liquid Stocks To Watch Out for Fat Returns in 2022
Liquidity determines a company’s ability to meet debt obligations by converting assets into liquid cash and equivalents. Robust liquidity levels support business growth. Adding stocks with favorable liquidity to the portfolio is likely to work in favor of investors seeking healthy returns.
However, one should be alert before investing in such stocks. While a high liquidity level may imply that the company is clearing its dues at a faster rate compared with peers, this may also suggest that it is unable to utilize assets competently.
Hence, one may consider a company’s efficiency level and its liquidity for identifying potential winners.
Measures to Identify Liquid Stocks
Current Ratio: It measures current assets relative to current liabilities. This ratio is used for measuring a company’s potential to meet short- and long-term debt obligations. A current ratio — also known as the working capital ratio — below 1 indicates that the company has more liabilities than assets. However, a high current ratio does not always indicate that the company is in good financial shape. It may also that the company failed to utilize its assets significantly. Hence, a range of 1-3 is considered ideal.
Quick Ratio: Unlike the current ratio, the quick ratio — also called the “acid-test ratio" or the "quick assets ratio" — reflects on a company’s ability to pay short-term obligations. It considers inventory excluding the current assets relative to current liabilities. Like the current ratio, a quick ratio of more than 1 is desirable.
Cash Ratio: This is the most conservative ratio among the three, as it takes into account cash and cash equivalents as well as invested funds relative to current liabilities. It measures a company’s ability to meet current debt obligations using the most liquid assets. Though a cash ratio of more than 1 may point toward sound financials, a higher number may indicate inefficiency in cash utilization.
A ratio greater than 1 is desirable at all times 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 respective industries can be considered efficient.
To ensure that these liquid and efficient stocks have solid growth potential, we have added our proprietary Growth Style Score to the screen.
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 greater 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 when combined with a Zacks Rank #1 or 2 handily beat other stocks.)
These criteria have narrowed down the universe of more than 7,700 stocks to only six.
Here are four of the six stocks that qualified the screen:
Headquartered in Menomonee Falls, WI, Kohl’s Corporation (KSS - Free Report) is a department store chain that operates specialty department stores and an e-commerce site in the United States. The company offers moderately-priced apparel, footwear and accessories for women, men and children, beauty and home articles. Kohl’s appeals to middle-class consumers as it sells discounted branded and private-label clothing and home goods. As of Oct 30, 2021, Kohl’s operated more than 1,100 stores across 49 states, as well as online at Kohl's.com and on the Kohl's app. The Zacks Consensus Estimate for fiscal 2021 earnings is pegged at $7.30 per share, up 21.1% in the past 60 days. Kohl’s has a Growth Score of A and a trailing four-quarter earnings surprise of 114.5%, on average.
Kearney, NE-based Buckle (BKE - Free Report) is a well-known retailer that sells a wide array of brand names and private label casual apparel, including tops, denim and other casual bottoms, sportswear, outerwear, accessories and footwear. Buckle emphasizes on personalized attention to its clients and offers individual customer services such as free alterations, layaways and a loyalty program. The Zacks Consensus Estimate for its fiscal 2021 earnings is pegged at $4.76 per share, up 12.3% in the past 60 days. The company has a Growth Score of B and a trailing four-quarter earnings surprise of 42.8%, on average.
Based in Phoenix, AZ, Cavco Industries (CVCO - Free Report) designs and manufactures factory-built housing structures. The company’s products are sold under brand names like Cavco Homes, Palm Harbor Homes, Friendship Homes, Fleetwood Homes, Fairmont Homes and Chariot Eagle, among others. Cavco Industries is one of the prominent producers of park model RVs, vacation cabins and modular homes. The Zacks Consensus Estimate for 2022 earnings is pegged at $13.71 per share, up 17.2% in the past 60 days. The company has a Growth Score of A and a trailing four-quarter earnings surprise of 30.5%, on average.
Based in Colorado Springs, CO, Century Casinos (CNTY - Free Report) is a well-known casino entertainment company. The company’s operations are mainly located in United States and Canada. Century Casinos holds a 66.6% ownership stake in Casinos Poland through its Austrian subsidiary. The Zacks Consensus Estimate for 2021 earnings is pegged at 75 cents per share, up 25% in the past 60 days. The company has a Growth Score of A and a trailing four-quarter earnings surprise of 758.9%, on average.
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. It's 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 to the Research Wizard today.
Disclosure: Officers, directors and/or 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 that are mentioned in this material.
Disclosure: Performance information for Zacks’ portfolios and strategies are available at: https://www.zacks.com/performance