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Watch for These 4 Top-Ranked Liquid Stocks for Solid Gains
Investors looking for high returns will likely benefit from adding stocks with robust liquidity levels as liquidity supports business growth.
Liquidity primarily determines a company's capability to meet debt obligations by converting assets into liquid cash and equivalents. These stocks have always been on investors' radar, owing to their potential to provide strong returns.
One should be alert before investing in such stocks. While a high liquidity level may imply that the company is clearing its dues faster than its peers, it may also suggest that the company is unable to utilize its assets competently.
Hence, one may consider a company's efficiency level along with its liquidity to identify potential winners.
Measures to Identify Liquid Stocks
Current Ratio: It measures current assets relative to current liabilities. The 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 suggest that the company is in good financial shape. It may also suggest 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" — indicates 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 considers cash and cash equivalents and 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 suggest 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.
Here are four of the 17 stocks that qualified for the screen:
San Jose, CA-based Cadence Design Systems offers products and tools that help customers design electronic products. Cadence's core electronic design automation or EDA software and services enable engineers to develop different types of integrated circuits. Cadence is well-positioned for growth driven by its expanding product portfolio and strong demand for products from existing and emerging markets.
The company recently reported strong first-quarter 2022 results, with revenues increasing 23% on a year-over-year basis. Driven by strong first-quarter results, the company now expects revenues for the full year in the range of $3.395-$3.435 billion compared with the earlier guidance of $3.32-$3.38 billion.
The Zacks Consensus Estimate for 2022 earnings is pegged at $3.89 per share, up 4.3% in the past 60 days. CDNS has a Growth Score of B and a trailing four-quarter earnings surprise of 10.6%, on average
Kearney, NE-based Buckle is a well-known retailer that sells several brands and private label casual apparel, including tops, denim and other casual bottoms, sportswear, outerwear, accessories and footwear. Buckle emphasizes personalized attention to its clients and offers individual customer services like free alterations, layaways and a loyalty program.
The Zacks Consensus Estimate for its fiscal 2022 earnings is pegged at $5.25 per share, up 10.3% in the past 60 days. The company has a Growth Score of B and a trailing four-quarter earnings surprise of 45%, on average.
Headquartered in Houston, TX, Magnolia Oil & Gas is an independent upstream operator engaged in exploring, developing and producing natural gas, crude oil and natural gas liquids. The company is focused on the Eagle Ford Shale and Austin Chalk formations in South Texas. The Zacks Consensus Estimate for its 2022 earnings is pegged at $4.27 per share, up 53.6% in the past 60 days. Magnolia Oil & Gas has a Growth Score of B and a trailing four-quarter earnings surprise of 18.5%, on average.
Based in Nashville, TN, Louisiana-Pacific Corp. is a leading manufacturer of sustainable, quality engineered wood building materials, structural framing products as well as exterior siding for residential, industrial and light commercial construction. The company operates 20 modern, strategically located facilities in the United States and Canada, two facilities in Chile and a facility in Brazil. It also operates facilities through a joint venture.
The company's products are used primarily in new home construction, repair and remodeling and outdoor structures. The company is reaping benefits from solid demand from the U.S. residential market. Strategic business transformation, effective cash management and inorganic moves are likely to boost performance in the future.
The Zacks Consensus Estimate for 2022 earnings is pegged at $14.87 per share, up 25.3% in the past 60 days. Louisiana-Pacific has a Growth Score of B and a trailing four-quarter earnings surprise of 14%, 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.
About Screen of the Week
Zacks.com created the first and best screening system on the web earning the distinction as the "#1 site for screening stocks" by Money Magazine. But powerful screening tools is just the start. That is why Zacks created the Screen of the Week to highlight profitable stock picking strategies that investors can actively use.
Strong Stocks that Should Be in the News
Many are little publicized and fly under the Wall Street radar. They're virtually unknown to the general public. Yet today's 220 Zacks Rank #1 "Strong Buys" were generated by the stock-picking system that has more than doubled the market from 1988 through 2016. Its average gain has been a stellar +25% per year. See these high-potential stocks free >>.
Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.
Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performancefor information about the performance numbers displayed in this press release.
See More Zacks Research for These Tickers
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Zacks.com featured highlights include Cadence Design Systems, Buckle, Magnolia Oil & Gas, and Louisiana-Pacific
For Immediate Release
Chicago, IL – May 11, 2022 – Stocks in this week’s article Cadence Design Systems (CDNS - Free Report) , Buckle (BKE - Free Report) , Magnolia Oil & Gas (MGY - Free Report) , and Louisiana-Pacific Corp. (LPX - Free Report) .
Watch for These 4 Top-Ranked Liquid Stocks for Solid Gains
Investors looking for high returns will likely benefit from adding stocks with robust liquidity levels as liquidity supports business growth.
Liquidity primarily determines a company's capability to meet debt obligations by converting assets into liquid cash and equivalents. These stocks have always been on investors' radar, owing to their potential to provide strong returns.
One should be alert before investing in such stocks. While a high liquidity level may imply that the company is clearing its dues faster than its peers, it may also suggest that the company is unable to utilize its assets competently.
Hence, one may consider a company's efficiency level along with its liquidity to identify potential winners.
Measures to Identify Liquid Stocks
Current Ratio: It measures current assets relative to current liabilities. The 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 suggest that the company is in good financial shape. It may also suggest 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" — indicates 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 considers cash and cash equivalents and 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 suggest 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.
Here are four of the 17 stocks that qualified for the screen:
San Jose, CA-based Cadence Design Systems offers products and tools that help customers design electronic products. Cadence's core electronic design automation or EDA software and services enable engineers to develop different types of integrated circuits. Cadence is well-positioned for growth driven by its expanding product portfolio and strong demand for products from existing and emerging markets.
The company recently reported strong first-quarter 2022 results, with revenues increasing 23% on a year-over-year basis. Driven by strong first-quarter results, the company now expects revenues for the full year in the range of $3.395-$3.435 billion compared with the earlier guidance of $3.32-$3.38 billion.
The Zacks Consensus Estimate for 2022 earnings is pegged at $3.89 per share, up 4.3% in the past 60 days. CDNS has a Growth Score of B and a trailing four-quarter earnings surprise of 10.6%, on average
Kearney, NE-based Buckle is a well-known retailer that sells several brands and private label casual apparel, including tops, denim and other casual bottoms, sportswear, outerwear, accessories and footwear. Buckle emphasizes personalized attention to its clients and offers individual customer services like free alterations, layaways and a loyalty program.
The Zacks Consensus Estimate for its fiscal 2022 earnings is pegged at $5.25 per share, up 10.3% in the past 60 days. The company has a Growth Score of B and a trailing four-quarter earnings surprise of 45%, on average.
Headquartered in Houston, TX, Magnolia Oil & Gas is an independent upstream operator engaged in exploring, developing and producing natural gas, crude oil and natural gas liquids. The company is focused on the Eagle Ford Shale and Austin Chalk formations in South Texas. The Zacks Consensus Estimate for its 2022 earnings is pegged at $4.27 per share, up 53.6% in the past 60 days. Magnolia Oil & Gas has a Growth Score of B and a trailing four-quarter earnings surprise of 18.5%, on average.
Based in Nashville, TN, Louisiana-Pacific Corp. is a leading manufacturer of sustainable, quality engineered wood building materials, structural framing products as well as exterior siding for residential, industrial and light commercial construction. The company operates 20 modern, strategically located facilities in the United States and Canada, two facilities in Chile and a facility in Brazil. It also operates facilities through a joint venture.
The company's products are used primarily in new home construction, repair and remodeling and outdoor structures. The company is reaping benefits from solid demand from the U.S. residential market. Strategic business transformation, effective cash management and inorganic moves are likely to boost performance in the future.
The Zacks Consensus Estimate for 2022 earnings is pegged at $14.87 per share, up 25.3% in the past 60 days. Louisiana-Pacific has a Growth Score of B and a trailing four-quarter earnings surprise of 14%, 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.
For the rest of this Screen of the Week article please visit Zacks.com at:
https://www.zacks.com/stock/news/1921707/watch-for-these-4-top-ranked-liquid-stocks-for-solid-gains
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.
About Screen of the Week
Zacks.com created the first and best screening system on the web earning the distinction as the "#1 site for screening stocks" by Money Magazine. But powerful screening tools is just the start. That is why Zacks created the Screen of the Week to highlight profitable stock picking strategies that investors can actively use.
Strong Stocks that Should Be in the News
Many are little publicized and fly under the Wall Street radar. They're virtually unknown to the general public. Yet today's 220 Zacks Rank #1 "Strong Buys" were generated by the stock-picking system that has more than doubled the market from 1988 through 2016. Its average gain has been a stellar +25% per year. See these high-potential stocks free >>.
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Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.
Contact: Jim Giaquinto
Company: Zacks.com
Phone: 312-265-9268
Email: pr@zacks.com
Visit: https://www.zacks.com/
Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performancefor information about the performance numbers displayed in this press release.