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For Immediate Release
Chicago, IL – November 1, 2021 – Stocks in this week’s article are Hibbett, Inc. HIBB, Tesla, Inc. TSLA, Arch Resources, Inc. ARCH, Magnolia Oil & Gas Corporation MGY and Sonos, Inc. SONO.
Bet on These 5 Top-Performing Liquid Stocks for Robust Returns
Investors looking for solid returns will benefit from adding stocks with favorable liquidity in their investment portfolio.
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.
However, one should be cautious enough before investing in such stocks. A high liquidity level may indicate that the company is clearing its dues faster than its peers. However, it may also suggest that the company is not able to utilize its assets effectively.
Hence, one may consider a company’s efficiency level in addition to its liquidity for identifying prospective winners.
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 short- and long-term debt obligations. 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 indicate that the company failed to utilize its assets significantly. Hence, a range of 1-3 is considered ideal.
Quick Ratio: Unlike current ratio, quick ratio — also called “acid-test ratio" or "quick assets ratio" — reflects on 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, as it takes into account cash and cash equivalents as well as invested funds relative to current liabilities. It measures a company’s ability to meet current debt obligations using the most liquid of assets. Though a cash ratio of more than 1 may point toward sound financials, a higher number may indicate inefficiency in cash utilization.
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/1819953/bet-on-these-5-top-performing-liquid-stocks-for-robust-returns
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Hibbett, Inc. (HIBB) : Free Stock Analysis Report
Sonos, Inc. (SONO) : Free Stock Analysis Report
Tesla, Inc. (TSLA) : Free Stock Analysis Report
Arch Resources Inc. (ARCH) : Free Stock Analysis Report
Magnolia Oil & Gas Corp (MGY) : Free Stock Analysis Report
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