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Zacks.com featured highlights include: Herbalife, Crocs, Attunity and Cadence Design

Zacks Equity Research
Zacks.com featured highlights include: Herbalife, Crocs, Attunity and Cadence Design

For Immediate Release

Chicago, IL – November 15, 2018 - Stocks in this week’s article are Herbalife Nutrition Ltd. HLF, Crocs, Inc. CROX, Attunity Ltd. ATTU and Cadence Design Systems Inc. CDNS.

Top-Ranked Liquid Stocks for Impressive Returns

Investors seeking strong returns may allocate their funds in stocks with significant liquidity. Liquidity is an important yardstick that indicates a company’s capability to meet debt obligations by converting assets into cash.

A company with a favorable liquidity position has the potential to generate higher returns as liquidity drives growth. However, one should exercise caution before investing in such stocks. While a high liquidity level may imply that the company is meeting its obligations at a faster rate than its peers, it may also indicate that the company is failing to use its assets efficiently.

Hence, the efficiency level of a company should be considered in addition to its liquidity to identify potential winners as this combination indicates underlying financial strength.

Measures to Identify Liquid Stocks

Current Ratio: It measures current assets relative to current liabilities. This ratio is used for measuring a company’s potential to meet both short- and long-term debt obligations. Thus, a current ratio — also known as working capital ratio — below 1 indicates that the company has more liabilities than assets. However, a high current ratio does not always indicate that the company is in good financial shape. It may also mean that the company has failed to utilize its assets significantly. Hence, a range of 1 to 3 is considered ideal.

Quick Ratio: Unlike current ratio, quick ratio – also called “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. Like the current ratio, a quick ratio of greater than 1 is desirable.

Cash Ratio: This is the most conservative ratio among the three, as it takes into account only cash and cash equivalents, and invested funds relative to current liabilities. It measures a company’s ability to meet its current debt obligations using the most liquid of assets. Though a cash ratio higher than 1 may point to sound financials, a high number may indicate inefficiency in cash utilization.

So, a ratio greater than 1 is desirable at all times but may not always appropriately represent a company’s financial condition.

For the rest of this Screen of the Week article please visit Zacks.com at: https://www.zacks.com/stock/news/337438/4-topranked-liquid-stocks-for-impressive-returns

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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Attunity Ltd. (ATTU) : Free Stock Analysis Report
 
Cadence Design Systems, Inc. (CDNS) : Free Stock Analysis Report
 
Herbalife LTD. (HLF) : Free Stock Analysis Report
 
Crocs, Inc. (CROX) : Free Stock Analysis Report
 
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