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Actionable news in NVDA: NVIDIA Corporation,

Zacks.com featured highlights: NVIDIA, Bruker, Trupanion, Masimo and Laredo Petroleum

For Immediate Release

Chicago, IL – July 22, 2016 - Stocks in this week’s article include: NVIDIA Corporation (NVDA), Bruker Corporation (BRKR), Trupanion, Inc. (TRUP), Masimo Corporation (MASI) and Laredo Petroleum, Inc. ( LPI).

Screen of the Week of Zacks Investment Research:

Invest in These Liquid Stocks to Derive Solid Returns

Healthy liquidity positions help a company to witness strong business growth and yield encouraging returns. Liquidity helps to judge a company’s ability to meet its debt obligations.

However, high liquidity may not always indicate that the company is financially strong. It may also mean that the company is running its business inefficiently. Hence, one should give precedence to a company’s efficiency level in addition to its liquidity position. Investing in favorably liquid company with impressive efficiency level may provide strong returns.

How to Measure Liquidity?

Liquidity ratios – current, quick and cash ratios – are considered popular indicators of liquidity levels. Favorable liquidity ratios may help an investor to identify a company’s capability of converting its assets to meet its debt obligations. While current ratio or working capital ratio seeks to measure a company’s proficiency in meeting short- as well as long-term debt obligation, quick ratio or acid-test ratio or quick assets ratio indicates its capability of clearing only its short-term debt obligations. This is why current ratio takes current assets relative to current liabilities into consideration, while quick ratio accounts for current assets excluding inventory to current liabilities.

On the other hand, the most conservative of the liquidity ratios, cash ratio aims to measure a company’s potential to pay its current debt obligations by converting its most liquid assets. In order to achieve its objective, cash ratio only considers cash and cash equivalents relative to current liabilities. Though a higher value of these ratios may indicate that the company is in a sound financial position, significantly high values may signal that it is utilizing its assets inefficiently. Hence, companies with liquidity ratios between 1 and 3 are considered to have favorable liquid levels.

Screening Parameters

Apart from considering ideal ranges of liquidity ratios, we have added asset utilization in our screening parameters with an objective to pick efficient stocks only. Asset utilization is a ratio of total sales over the past 12 months to the last four-quarter average of total assets. It is considered one of the most popular means of identifying efficient companies.

In order to make our strategy more profitable, we have added our proprietary Growth Style Score to the screen with an objective to ensure that these liquid and efficient stocks have solid growth potential too.

Current Ratio, Quick Ratio and Cash Ratio between 1 and 3
(While liquidity ratios of greater than 1 are desirable, significantly high ratios may indicate inefficiency.)

Asset utilization greater than industry...


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