A couple of my strong performers over the past few years share common characteristics of no debt, positive earnings, and future growth potential. To find some new investment candidates, I used Motley Fool CAPS' screener to look for stocks that share those traits. The screen was run with the following parameters:

  • Market capitalization $250 million to $1 billion.
  • CAPS rating of four or five stars out of five.
  • Price-to-earnings ratio less than 17.
  • LT debt-to-equity ratio less than 0.05.
  • More than $2 cash per share.

The screen returned 37 stocks. Technology companies dominated the results with 13 of the hits, but a wide variety of industries were represented. The results were exported to a spreadsheet and quickly reviewed for growth prospects. The five stocks listed below are all rated five stars (out of five) in CAPS and stood out as good candidates for further research.

Company

Cash Per Share

Forward P/E

Sector

Recent Price

2010-2011 Earnings Growth Estimate

Haynes International (Nasdaq: HAYN)

$4.82

15.65

Basic materials

$30.11

184.8%

J&J Snack Foods (Nasdaq: JJSF)

$2.94

13.82

Consumer goods

$37.96

7.5%

MKS Instruments (Nasdaq: MKSI)

$3.02

6.16

Technology

$17.91

10.4%

Neutral Tandem (Nasdaq: TNDM)

$5.65

10.58

Technology

$12.01

6.7%

Park Electrochemical (NYSE: PKE)

$4.40

12.12

Technology

$24.93

10.9%

Source: Motley Fool screen results, Yahoo! Finance, and author's calculations.

Haynes International is a specialty steels manufacturer. That may not be the best business for a soft economy, but very low debt, cash, and earnings let the company hang on through weakness and position it to make investments and set up for better times. The company pays a dividend, so investors get paid to wait.

J&J Snack Foods distributes its products through retail and directly to food service kitchens. Nothing spectacular, just a steady business with plenty of cash to take advantage of any acquisition or capital expenditure opportunities the market may offer.

MKS Instruments provides measurement and control products to a variety of industrial customers. A P/E ratio well in value territory combined with good growth prospects make it worth a closer look.

Neutral Tandem provides services and equipment to the telecommunications industry. It has cash equal to nearly half the market cap, below-market valuation, and reasonable growth estimates.

Park Electrochemical produces printed circuit board materials for a variety of technology customers. A strong cash position, reasonable earnings growth prospects, and a small dividend carried Park past an initial look.

These five stocks look promising, but like any screen results, the list should be considered a starting point for further research, not a recommendation to buy.

What are you using to look for investment candidates? Weigh in with a comment below to share.

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