Discovering the next compelling candidate for a stock portfolio is not an easy task to fulfill. The financial world contains an unimaginably large number of data and investing tools. In order to extract wisdom out of them, investors often have to keep their nose to the grindstone. However, stock screeners can take some burden off investors’ shoulders and provide them with intriguing investment opportunities in the blink of an eye.
Seeking for an investment opportunity
With that in mind, I decided to use the Motley Fool CAPS community’s screener to narrow down the universe of stocks based on five key criteria:
Five-star rated stocks. The aggregate intelligence of thousands of participants in the CAPS community can be a helpful indicator of high-quality stocks.
A market capitalization of at least $1 billion. This includes mid-sized companies, which have deeper pockets for weathering difficulties compared to small ones, and greater flexibility in growing earnings than large businesses.
3-year revenue growth of more than 10%. Without sound top line growth, enjoying sustainable bottom line growth is a tough nut to crack.
Gross margin greater than 20%. Gross margins reflect the ability to turn revenue into profits and indicate how efficient a company is at the most fundamental level.
Current ratio of at least 2, which implies that the company is perfectly capable of meeting short-term debt obligations.
Here are a few companies that showed up on my screen:
Skyworks Solutions Inc (NASDAQ:SWKS)
Mobile chip maker Skyworks scores a 3-year top line growth of around 25% and a gross margin of nearly 43%. The company’s balance sheet is clean as a whistle. It has no debt and a cash position sturdy enough to encourage an aggressive growth strategy.
Skyworks Solutions Inc (NASDAQ:SWKS)’ key strengths lie in its global reach and its engagement with a diverse set of top-tier customers, such as
Google Inc (NASDAQ:GOOG), Cisco Systems, Inc. (NASDAQ:CSCO), and Apple Inc. (NASDAQ:AAPL). It is a market leader in meeting the needs of all major handset manufacturers and smartphone providers. Moreover, its broad front-end module and precision analog product portfolio enables it to address a slew of markets, including automotive, military, and medical.
The company’s future looks bright, despite the competitive forces that shape today’s semiconductors industry. Skyworks Solutions Inc (NASDAQ:SWKS) is well positioned to benefit from an increasingly connected wireless world. EPS over the next five years is expected to reach double digit growth rates. Also, analysts’ average target price signals an at least 40% appreciation potential.
Raven Industries, Inc. (NASDAQ:RAVN)
Founded in 1956, Raven Industries is a diversified technology company. It offers custom solutions for the precision agriculture, high performance specialty films, aerospace, and electronic manufacturing services markets.
The company’s business model serves as a platform for success. Raven Industries operates within a set of diversified and fundamentally strong market segments. This way, it ensures a balanced revenue stream, which bolsters risk mitigation. Most importantly, it consistently invests in money-making technological innovations that give the company an edge over its peers.