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Snap These 4 Top-Ranked Liquid Stocks to Power Your Portfolio
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Amid the ongoing volatility, investors looking for healthy returns will benefit from stocks with favorable liquidity in their investment portfolios.
Liquidity measures a company’s ability to meet short-term debt obligations by converting assets into liquid cash and equivalents. These stocks have always been on investors’ radar owing to their potential for solid returns. Investors should be careful about investing in a stock with a high liquidity level.
High liquidity may also indicate that the company cannot utilize its assets competently.
Besides having sufficient cash, an investor might also consider a company’s capital deployment abilities before investing in the stock. A healthy company with favorable liquidity may be a profitable pick for one’s portfolio.
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 — 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 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 — 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, considering 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 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. 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 the universe of more than 7,700 stocks to only 8.
Here are four of the eight stocks that qualified for the screen:
Perion Network (PERI - Free Report) is an Israel-based technology company that offers online advertising and search monetization solutions to brands and publishers. The company is committed to providing data-driven execution, from high-impact ad formats to branded search and a unified social and mobile programmatic platform. The Zacks Consensus Estimate for its 2022 earnings is pegged at $2.20 per share, up 17.6% in the past 60 days. The company has a Growth Score of A and a trailing four-quarter earnings surprise of 27.8%, on average.
WhiteHorse Finance (WHF - Free Report) is a business development company focused on originating loans to privately held small-cap companies across various industries. The company recently reported results for the third quarter of 2022, with Net Asset Value amounting to $343 million or $14.76 per share. The company also announced a distribution of $0.355 per share for the fourth quarter, payable on Jan 4, 2023, to stockholders of record as of Dec 21, 2022. The Zacks Consensus Estimate for its 2022 bottom line is pegged at $1.54 per share, up 4.1% in the past 60 days. The company has a Growth Score of B.
Forestar Group (FOR - Free Report) is a residential lot development company and a major subsidiary of. D.R. Horton. The company recently reported fourth-quarter of fiscal 2022 results, with revenues amounting to $381.4 million on 3,914 lots sold. In fiscal 2022, the company delivered more than 17,600 residential lots. The Zacks Consensus Estimate for fiscal 2023 earnings is pegged at a $2.77 per share, up 6.1% in the past 60 days. FOR has a Growth Score of B and a trailing four-quarter earnings surprise of 50%, on average.
TravelCenters of America is a full-service national travel center chain in the United States. The company’s locations serve various professional drivers and other highway travelers each month, including virtually all major trucking fleets. The company operates its centers under the TravelCenters of America, TA and Petro brand names and offers diesel and gasoline fueling services, restaurants, heavy truck repair facilities, stores and other services. The Zacks Consensus Estimate for 2022 bottom line is pegged at $9.03 per share, up 19.4% in the past 60 days. TA has a Growth Score of A and a trailing four-quarter earnings surprise of 1,707%, 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 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/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.
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Snap These 4 Top-Ranked Liquid Stocks to Power Your Portfolio
Amid the ongoing volatility, investors looking for healthy returns will benefit from stocks with favorable liquidity in their investment portfolios.
Liquidity measures a company’s ability to meet short-term debt obligations by converting assets into liquid cash and equivalents. These stocks have always been on investors’ radar owing to their potential for solid returns.
Investors should be careful about investing in a stock with a high liquidity level.
High liquidity may also indicate that the company cannot utilize its assets competently.
Besides having sufficient cash, an investor might also consider a company’s capital deployment abilities before investing in the stock. A healthy company with favorable liquidity may be a profitable pick for one’s portfolio.
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 — 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 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 — 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, considering 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 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.
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 the universe of more than 7,700 stocks to only 8.
Here are four of the eight stocks that qualified for the screen:
Perion Network (PERI - Free Report) is an Israel-based technology company that offers online advertising and search monetization solutions to brands and publishers. The company is committed to providing data-driven execution, from high-impact ad formats to branded search and a unified social and mobile programmatic platform. The Zacks Consensus Estimate for its 2022 earnings is pegged at $2.20 per share, up 17.6% in the past 60 days. The company has a Growth Score of A and a trailing four-quarter earnings surprise of 27.8%, on average.
WhiteHorse Finance (WHF - Free Report) is a business development company focused on originating loans to privately held small-cap companies across various industries. The company recently reported results for the third quarter of 2022, with Net Asset Value amounting to $343 million or $14.76 per share. The company also announced a distribution of $0.355 per share for the fourth quarter, payable on Jan 4, 2023, to stockholders of record as of Dec 21, 2022. The Zacks Consensus Estimate for its 2022 bottom line is pegged at $1.54 per share, up 4.1% in the past 60 days. The company has a Growth Score of B.
Forestar Group (FOR - Free Report) is a residential lot development company and a major subsidiary of. D.R. Horton. The company recently reported fourth-quarter of fiscal 2022 results, with revenues amounting to $381.4 million on 3,914 lots sold. In fiscal 2022, the company delivered more than 17,600 residential lots. The Zacks Consensus Estimate for fiscal 2023 earnings is pegged at a $2.77 per share, up 6.1% in the past 60 days. FOR has a Growth Score of B and a trailing four-quarter earnings surprise of 50%, on average.
TravelCenters of America is a full-service national travel center chain in the United States. The company’s locations serve various professional drivers and other highway travelers each month, including virtually all major trucking fleets. The company operates its centers under the TravelCenters of America, TA and Petro brand names and offers diesel and gasoline fueling services, restaurants, heavy truck repair facilities, stores and other services. The Zacks Consensus Estimate for 2022 bottom line is pegged at $9.03 per share, up 19.4% in the past 60 days. TA has a Growth Score of A and a trailing four-quarter earnings surprise of 1,707%, 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 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 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.