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4 Top-Performing Liquid Stocks to Scoop for Strong Returns
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Creating a portfolio with favorable liquidity stocks is likely to work in favor of investors seeking healthy returns.
Liquidity measures a company’s capability to meet short-term debt obligations. Stocks with high liquidity levels have always been in demand, owing to their potential to provide maximum returns.
One needs to exercise caution before investing in such stocks. High liquidity may indicate that the company is clearing its dues faster than its peers. However, it may also suggest that the firm cannot utilize its assets competently.
Hence, an investor may consider a company’s efficiency level and liquidity to identify potential winners.
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 respective industries can be considered efficient.
We added our proprietary Growth Style 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.)
These criteria have narrowed the universe of more than 7,700 stocks to only eight.
Here are four stocks out of the eight that qualified for the screen:
American Superconductor Corporation (AMSC - Free Report) is a provider of megawatt-scale power resiliency solutions. It develops and sells a wide range of products and solutions based on power electronic systems and high-temperature superconductor wires that improve the efficiency, reliability and quality of electricity during its generation, transmission, distribution and usage. It operates under two segments namely Grid and Wind.
In the last reported quarter, revenues came in at $40.3 million, up 33% year over year, driven by increased shipments of new energy power systems and electrical control system shipments. At the end of the last reported quarter, AMSC had $160 million in 12-month backlog and $250 million in total backlog. Continued momentum across semiconductors, renewables, mining and metals and military end-markets bodes well. It recently acquired NWL to expand its product offerings and market reach. Headquartered in New Jersey, NWL is a private company engaged in providing power supplies to military and industrial clients.
The Zacks Consensus Estimate for the fiscal 2024 earnings is pegged at 31 cents per share, unchanged in the past seven days. The company has a Growth Score of A and a trailing four-quarter earnings surprise of 169.8%, on average.
Willdan Group, Inc (WLDN - Free Report) provides technical, professional and consulting services to utilities, private industry and public agencies. The company has a comprehensive product portfolio encompassing energy policy planning and advisory services, energy efficiency and sustainability, engineering and planning, electric grid solutions and municipal financial consulting services.
In the last reported quarter, the company’s contract revenues increased 18.4% to $141 million. Strengthening electric load growth trend driven by higher electricity demand at data centers owing to proliferation of artificial intelligence bodes well. It recently won a $102-million worth of contract from the Clark County School District (CCSD) for energy-saving modification projects in 204 campuses. The energy-saving modification projects will lower energy consumption across campuses and help CCSD save $170 million in lifetime energy savings, coupled with a $700,000-reduction in annual operations and maintenance costs.
The Zacks Consensus Estimate for WLDN’s 2024 bottom line is pegged at earnings of $1.97 per share, unchanged in the past seven days. The company has a Growth Score of B and a trailing four-quarter earnings surprise of 82.2%, on average.
Spotify Technology S.A. (SPOT - Free Report) provides music streaming services. In the last reported quarter, revenues increased 20% year over year while total monthly active users increased 14%. Premium subscriptions registered 12% year-over-year growth.
Management highlighted its efforts at expanding the business. SPOT expanded its video podcast catalog to more than 250,000 shows. It also unveiled a basic plan for eligible users in Australia, the U.K. and the United States to avail the option for ad-free music listening without audiobook listening time. The Zacks Consensus Estimate for its 2024 earnings is pegged at $6.32 per share, moving north by 27.7% in the past 60 days. SPOT has a Growth Score of A. The stock has surged 155.1% in the past year.
Angi Inc (ANGI - Free Report) is a platform that connects homeowners with home service professionals. In the last reported quarter, ANGI’s monetized transactions per service request increased 20% to 1.37. International revenues were up 14% due to increasing service professional network and revenue-per-service-professional.
The Zacks Consensus Estimate for its 2024 earnings is pegged at 1 cent per share, improving from a loss of 1 cent in the past seven days. ANGI has a Growth Score of A and a trailing four-quarter earnings surprise of 129.2%, on average.
Get the remaining stocks on the list and start testing this and other ideas. 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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4 Top-Performing Liquid Stocks to Scoop for Strong Returns
Creating a portfolio with favorable liquidity stocks is likely to work in favor of investors seeking healthy returns.
Liquidity measures a company’s capability to meet short-term debt obligations. Stocks with high liquidity levels have always been in demand, owing to their potential to provide maximum returns.
One needs to exercise caution before investing in such stocks. High liquidity may indicate that the company is clearing its dues faster than its peers. However, it may also suggest that the firm cannot utilize its assets competently.
Hence, an investor may consider a company’s efficiency level and liquidity to identify potential winners.
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 respective industries can be considered efficient.
We added our proprietary Growth Style 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.)
These criteria have narrowed the universe of more than 7,700 stocks to only eight.
Here are four stocks out of the eight that qualified for the screen:
American Superconductor Corporation (AMSC - Free Report) is a provider of megawatt-scale power resiliency solutions. It develops and sells a wide range of products and solutions based on power electronic systems and high-temperature superconductor wires that improve the efficiency, reliability and quality of electricity during its generation, transmission, distribution and usage. It operates under two segments namely Grid and Wind.
In the last reported quarter, revenues came in at $40.3 million, up 33% year over year, driven by increased shipments of new energy power systems and electrical control system shipments. At the end of the last reported quarter, AMSC had $160 million in 12-month backlog and $250 million in total backlog.
Continued momentum across semiconductors, renewables, mining and metals and military end-markets bodes well. It recently acquired NWL to expand its product offerings and market reach. Headquartered in New Jersey, NWL is a private company engaged in providing power supplies to military and industrial clients.
The Zacks Consensus Estimate for the fiscal 2024 earnings is pegged at 31 cents per share, unchanged in the past seven days. The company has a Growth Score of A and a trailing four-quarter earnings surprise of 169.8%, on average.
Willdan Group, Inc (WLDN - Free Report) provides technical, professional and consulting services to utilities, private industry and public agencies. The company has a comprehensive product portfolio encompassing energy policy planning and advisory services, energy efficiency and sustainability, engineering and planning, electric grid solutions and municipal financial consulting services.
In the last reported quarter, the company’s contract revenues increased 18.4% to $141 million. Strengthening electric load growth trend driven by higher electricity demand at data centers owing to proliferation of artificial intelligence bodes well. It recently won a $102-million worth of contract from the Clark County School District (CCSD) for energy-saving modification projects in 204 campuses. The energy-saving modification projects will lower energy consumption across campuses and help CCSD save $170 million in lifetime energy savings, coupled with a $700,000-reduction in annual operations and maintenance costs.
The Zacks Consensus Estimate for WLDN’s 2024 bottom line is pegged at earnings of $1.97 per share, unchanged in the past seven days. The company has a Growth Score of B and a trailing four-quarter earnings surprise of 82.2%, on average.
Spotify Technology S.A. (SPOT - Free Report) provides music streaming services. In the last reported quarter, revenues increased 20% year over year while total monthly active users increased 14%. Premium subscriptions registered 12% year-over-year growth.
Management highlighted its efforts at expanding the business. SPOT expanded its video podcast catalog to more than 250,000 shows. It also unveiled a basic plan for eligible users in Australia, the U.K. and the United States to avail the option for ad-free music listening without audiobook listening time. The Zacks Consensus Estimate for its 2024 earnings is pegged at $6.32 per share, moving north by 27.7% in the past 60 days. SPOT has a Growth Score of A. The stock has surged 155.1% in the past year.
Angi Inc (ANGI - Free Report) is a platform that connects homeowners with home service professionals. In the last reported quarter, ANGI’s monetized transactions per service request increased 20% to 1.37. International revenues were up 14% due to increasing service professional network and revenue-per-service-professional.
The Zacks Consensus Estimate for its 2024 earnings is pegged at 1 cent per share, improving from a loss of 1 cent in the past seven days. ANGI has a Growth Score of A and a trailing four-quarter earnings surprise of 129.2%, on average.
Get the remaining stocks on the list and start testing this and other ideas. 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.