The liquidity of a stock is an important parameter that investors should consider while adding stocks to their portfolios. Liquidity primarily determines a company’s capability to meet debt obligations by converting assets into liquid cash and equivalents.
Liquid stocks have always been in demand owing to their potential to provide maximum returns. However, one should be alert enough before investing in such stocks. While a high liquidity level may imply that the company is clearing its dues faster than peers, it may also indicate that the company is failing to use its assets efficiently.
A ratio greater than 1 is always desirable but may not always represent a company’s financial condition.
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 industries can be considered efficient.
We added our proprietary Growth 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 (Buy).
These criteria have narrowed the universe of more than 7,700 stocks to only seven.
Here are four of the seven stocks that qualified the screen:
Accel Entertainment is a distributed gaming operator offering turnkey full-service gaming solutions to authorized non-casino locations such as truck stops, bars, restaurants, convenience stores and fraternal and veteran establishments, primarily in the United States.
The company recently acquired 85% of the ownership interests of Toucan Gaming, LLC and LSM Gaming, LLC for $40 million to expand its market footprint. Both are Louisiana-based route operators and owners of several licensed video poker establishments.
In the last reported quarter, ACEL reported revenues of $302.2 million, up 5.1% year over year. Adjusted EBITDA of $45.9 million rose 3.9% year over year.
The Zacks Consensus Estimate for 2024 earnings is pegged at 90 cents per share, unchanged in past seven days. ACEL has a Growth Score of B and a trailing four-quarter earnings surprise of 26.1%, on average.
Frontdoor is the parent company of home service plan brands like American Home Shield, HSA, Landmark and OneGuard. The company's customizable home service plans help customers protect and maintain their homes from costly and unplanned breakdowns of essential home systems and appliances.
FTDR recently acquired 2-10 Home Buyers Warranty in an all-cash transaction for $585 million. This particular buyout diversifies Frontdoor’s portfolio and client base. It will also increase cross-selling opportunities for FTDR’s home warranties and on-demand services.
In the last reported quarter, revenues came in at $540 million, up 3% year over year. The uptick was driven by a 4% increase in price, which was partly offset by a 1% decline from reduced volume. Further, the number of first-year Direct-to-Consumer home warranties was 271,000, up 3% sequentially. Gross margin expanded 550 basis points to 57% in the third quarter of 2024. The expansion was mainly driven by higher price and a shift to higher service fees.
It also concluded a $400 million share repurchase authorization in August 2024 and initiated a new three-year, $650 million buyback authorization in September 2024.
The Zacks Consensus Estimate for 2024 earnings is pegged at $3.15 per share, unchanged in past seven days. FTDR has a Growth Score of B and a trailing four-quarter earnings surprise of 269%, on average.
EverQuote, headquartered in Cambridge, MA, is an online insurance marketplace. The company's websites allow consumers to shop for auto, home, renters and life insurance.
EverQuote is gaining from its exclusive data assets and technology, deepened focus on core P&C markets and a robust financial profile. It is also focused on streamlining traffic operations, boosting AI-powered bidding solutions and rolling out advanced agent technology platforms, which positions it well for long-term growth. Recovery in automotive and other insurance verticals, given auto carrier recovery and growth in revenue per quote request, bodes well. In the last reported quarter, total revenues of $144.5 million increased 163% year over year.
The Zacks Consensus Estimate for EVER’s 2024 earnings is pegged at 73 cents per share, unchanged in the past 30 days. The company has a Growth Score of A and a trailing four-quarter earnings surprise of 149.6%, on average.
Roku is the leading TV streaming platform provider in the United States. Roku’s performance is being driven by increased user engagement on The Roku Channel and the popularity of the Roku TV program.
The company recently reported fourth-quarter 2024 results. It incurred a loss of 24 cents per share in the quarter, which came in narrower than the Zacks Consensus Estimate of a loss of 44 cents. The company had incurred a loss of 55 cents per share in the year-ago quarter. Revenues increased 22% from the year-ago quarter’s level to $1.2 billion and beat the consensus mark by 4.48%.
Roku continued to expand penetration in the United States, surpassing half of broadband households. Globally, Roku ended 2024 with 89.8 million streaming households and surpassed 90 million in the first week of January 2025. Fourth-quarter 2024 net adds were 4.3 million and full-year 2024 net adds were 9.8 million. The average revenue per user increased 4% year over year to $41.49 (on a trailing 12-month basis).
For 2025, Roku expects total net revenues of $4.61 billion, total gross profit of $2.005 billion and adjusted EBITDA of $350 million.
The Zacks Consensus Estimate for 2025 bottom line is pegged at a loss of 80 cents per share. The consensus mark improved from a loss of 91 cents seven days ago. The company has a Growth Score of A.
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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.
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EverQuote, Inc. (EVER) : Free Stock Analysis Report
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