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Top Liquid Stocks to Enhance Your Portfolio Opt for These 4 Top-Rated Liquid Stocks to Enrich Your Portfolio

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For investors in pursuit of substantial returns, investing in stocks with strong liquidity stands to provide an advantageous avenue for capital growth.

Liquidity is the bedrock of a companyโ€™s capacity to fulfill its financial obligations, as it allows for the conversion of assets into readily available cash and equivalents. Equating to perennial investor interest, these stocks have long been revered for their potential to yield robust returns.

Identifying Liquid Stocks

A timely word of caution to potential investors stands to reason. For while a high liquidity level might signify prompt debt clearance compared with industry peers, it could equally signal a companyโ€™s failure to maximize asset utilization.

Therefore, prudently gauging a companyโ€™s efficiency alongside its liquidity is paramount in unearthing potential investment winners.

Measures to Identify Liquid Stocks

Current Ratio: This metric gauges a companyโ€™s ability to meet short- and long-term debt obligations in relation to its current assets versus current liabilities. An optimal range of 1-3 is considered ideal.

Quick Ratio: Signifying a companyโ€™s capacity to meet short-term obligations, the quick ratio, ideally above 1, excludes inventory from current assets relative to current liabilities.

Cash Ratio: Conveying a firmโ€™s capability to meet existing debt obligations using highly liquid assets, a healthy cash ratio is always desirable, signaling sound financials, yet excessively high numbers may denote inefficiency in cash utilization.

The ratios, while sought to be greater than 1, may not always translate to the actual financial condition of a company.

Screening Parameters

Bearing the pivotal objective of cherry-picking the best amidst the lot, asset utilization โ€” a widely recognized measure of a companyโ€™s efficiency โ€” is cogently factored into the screening criteria. The asset utilization ratio helps delineate an entityโ€™s capability by indicating the ratio of its total sales in the past 12 months to the last four-quarter average of total assets.

Further bolstering this selection method, a Growth Style Score has been incorporated into the screen zone to verify the potential of these liquid and efficient stocks for enduring growth.

Key Selection Parameters

Current Ratio, Quick Ratio and Cash Ratio between 1 and 3: While emphasizing greater than 1 for liquidity ratios, overly high ratios may indicate inefficiency.

Asset utilization greater than the industry average: Excessive asset utilization compared to the industry average signifies a companyโ€™s efficiency.

Zacks Rank equal to #1: Only stocks with a Strong Buy rating can make the cut.

Growth Score less than or equal to B: Enhanced back-tested results substantiate that stocks with a Growth Score of A or B comfortably outpace others when amalgamated with a Zacks Rank #1 or 2.

Through, these stringent parameters have effectively condensed over 7,700 stocks to a mere 16.

Here are four stocks out of the 16 that qualified for the screen:

Netflix, Inc: Heralded as a trailblazer in the streaming sphere, Netflix concluded the fourth quarter of 2023 with a whopping 260.28 million paid subscribers globally. Adhering to a strategic game plan, the company experienced a 13.12 million hike in paid subscribers during Q4 2023, with a simultaneous 1% elevation in average revenue per subscription. Expected to prolong its dominion in the streaming arena, sustained by a diverse content portfolio and a resolute investment in localized and foreign-language content, Netflix anticipates formidable rivalry from the likes of Amazon Prime Video, Disney+, Apple, Peacock, and Paramount+. With NFLXโ€™s 2024 bottom line forecasted at $16.93 per share, marking a 6% ascent in the past 60 days, the company possesses a Growth Score of B and boasts an average trailing four-quarter earnings surprise of 5.4%.

Meta Platforms, Inc: As the worldโ€™s largest social media platform, META continues to amass steady user growth across all regions, particularly Asia Pacific. Notable traction in other platforms, such as Instagram, WhatsApp, Messenger, and Facebook, has been a pivotal growth propeller. Leveraging AI to recommend Reels content has ignited traffic on Instagram and Facebook, boding well for prospects. Yet, adversities in advertising revenues, stemming from challenging macroeconomic conditions, continue to loom. With 2024 earnings projected at $19.62 per share, depicting an 11.2% surge in the past 60 days, META holds a Growth Score of A and maintains a striking trailing four-quarter earnings surprise of 19.7%.

Deckers Outdoor Corporation: DNSC, a premier designer, producer, and brand manager of innovative, niche footwear and accessories tailored for outdoor sports and other lifestyle activities, prospers under the aegis of five proprietary brands โ€” UGG, HOKA, Teva, Sanuk, and Others. Noteworthy gains attributed to the UGG and HOKA brands are driving top-line performance. A robust uptick in the direct-to-consumer channels, coupled with a robust balance sheet and stable operating model, augur well for DNSC. Continued growth momentum in its global wholesale business, fueled by consumer demand in domestic and international markets, evinces encouraging signs. With its fiscal 2024 bottom line estimated at $26.85 per share, registering a 13.7% upswing in the past 60 days, DNSC commands a Growth Score of A and exhibits an impressive trailing four-quarter earnings surprise of 32.1%.

GigaCloud Technology: GCT offers comprehensive end-to-end B2B e-commerce solutions for voluminous parcel merchandise offerings worldwide. GCTโ€™s marketplace seamlessly orchestrates cross-border transactions between manufacturers, primarily in Asia, and resellers in the United States, Asia, and Europe. Steadfast at its core, the Zacks Consensus Estimate for GCTโ€™s 2023 bottom line remains firmly entrenched at $1.77 per share, with no changes in the past 60 days. GCT takes pride in its Growth Score of A.

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