It takes money to make money. Most investors know that, but with business media so focused on the "how much," very few investors bother to ask, "How fast?"
When judging a company's prospects, how quickly it turns cash outflows into cash inflows can be just as important as how much profit it's booking in the accounting fantasy world we call "earnings." This is one of the first metrics I check when I'm hunting for the market's best stocks. Today, we'll see how it applies to CarMax (NYSE: KMX ) .
Let's break this down
In this series, we measure how swiftly a company turns cash into goods or services and back into cash. We'll use a quick, relatively foolproof tool known as the cash conversion cycle, or CCC for short.
Why does the CCC matter? The less time it takes a firm to convert outgoing cash into incoming cash, the more powerful and flexible its profit engine is. The less money tied up in inventory and accounts receivable, the more available to grow the company, pay investors, or both.
Top Consumer Service Stocks To Buy For 2014: JDA Software Group Inc.(JDAS)
JDA Software Group, Inc. provides enterprise software solutions to enable planning, optimization, and execution of merchandising and supply chain processes primarily in the Americas, Europe, and the Asia Pacific. The company offers various planning and optimization solutions comprising demand management solutions that enable companies to plan demand for products and other resources, such as labor; allocation, replenishment, and fulfillment solutions to meet the requirements of the demand plan; merchandise planning solutions; assortment management solutions; and space and category management solutions. It also provides price optimization and revenue management, transportation planning, supply and manufacturing, network and inventory optimization, supplier relationship management, and workforce planning solutions. In addition, the company offers transaction systems consisting of merchandise operations systems that enable retailers to manage their inventory, product mix, pric ing, and promotional execution; transportation and logistics management solutions to manage transportation and logistics; contract manufacturing solutions for manufacturers of aerospace and defense products, including order management, repair management, and financial management; and store systems that provide retailers with point-of-sale, labor management, and back office applications. Further, it provides consulting services comprising implementation, strategic business, performance engineering, training, and managed services, as well as maintenance services. JDA Software Group serves manufacturers, wholesalers and distributors, retailers, government, and aerospace defense contractors, as well as to customers in service industries, such as travel, transportation, hospitality, media, and telecommunications. The company was founded in 1985 and is based in Scottsdale, Arizona.
Top Consumer Service Stocks To Buy For 2014: Taiwan Semiconductor Manufacturing Co Ltd (TSM)
Taiwan Semiconductor Manufacturing Co., Ltd. is a Taiwan-based company principally engaged in the research, development, manufacture and distribution of integrated circuit (IC) related products. The Company operates its businesses through wafer manufacture, mask production, wafer testing and packaging components. The Company also involves in the provision of production management, customer services and design services. Its products and services are applied in the manufacture of personal computers and peripheral products, information related products, wire and wireless communication systems, automobile and industrial equipment, as well as consumer electronic products, such as digital disk players, digital televisions (TVs), game consoles, digital cameras, among others. Its customers include Altera, AMD, Broadcom, Marvell, NVIDIA, Qualcomm, Analog Devices, Freescale, NXP and Texas Instruments, among others. In July 2010, Taiwan Semiconductor Manufacturing Co. acquired mechanical and engineering equipment from ASML HONG KONG LTD. In September 2010, the Company acquired a set of equipments from ASML HONG KONG LTD. In December 2010, the Company acquired a set of equipment from TOKYO ELECTRON LTD., KLA-TENCOR CORP. and NOVELLUS SYSTEMS INTERNATIONAL,B.V. In January 2011, the Company announced that it had acquired a set of equipment from KLA-TENCOR CORP., a set of equipment and facility, and another set of equipment from VARIAN SEMI. EQUIP. ASSOCIATES GmbH. In March 2011, the Company acquired a set of equipments from Rudolph Technologies, Inc.In March 2011, the Company acquired a set of equipments from Rudolph Technologies, Inc. In May 2011, it acquired a set of equipments form APPLIED MATERIALS SOUTH EAST ASIA PACIFIC LTD., Hamatech APE Gmbh and CO. KG, TOKYO ELECTRON LTD., DAINIPPON SCREEN MFG. CO., LTD., and VARIAN SEMI. EQUIP. ASSOCIATES GMBH.
TSMC's customers include semiconductor companies, ranging from fabless semiconductor and systems companies, such as Advanced Micro Devices, In! c., Altera Corporation, Broadcom Corporation, Marvell Semiconductor Inc., MediaTek Inc., nVidia Corporation and Qualcomm Incorporated, to integrated device manufacturers, such as LSI Corporation, STMicroelectronics and Texas Instruments Inc. Fabless semiconductor and system companies accounted for approximately 80%, and integrated device manufacturers accounted for approximately 20% of its net sales as of December 31, 2009.
The Company manufactures semiconductors using CMOS and BiCMOS processes. The BiCMOS process combines the speed of the bipolar circuitry and the power consumption and density of the CMOS circuitry. It uses the CMOS process to manufacture logic semiconductors, memory semiconductors, including static random access memory (SRAM), flash memory, mixed-signal/ radio frequency (RF) semiconductors, which combine analog and digital circuitry in a single semiconductor, micro-electro-mechanical-system (MEMS), which combines micrometer featured mechanical parts, analog and digital circuitry in a single semiconductor, and embedded memory semiconductors, which combine logic and memory in a single semiconductor. The BiCMOS process is used to make high-end mixed-signal and other types of semiconductors.
Top 5 Restaurant Stocks To Invest In 2014: Vigil Health Solutions Inc.(VGL.V)
Vigil Health Solutions Inc. engages in the development, marketing, and distribution of emergency response and monitoring solutions to the providers of seniors housing in Canada and the United States. The company offers Vigil Integrated Care Management System, a technology platform combining software and hardware to provide solutions that guide care of and monitor seniors living in long-term care facilities. Its Vigil Integrated Care Management System includes Vitality Care System, a wireless or hybrid call system designed to alert caregivers or security staff when a resident is in need of assistance, identify who the resident is, and provide a general description of his/her location; and Vigil Nurse Call System, which allows residents to call caregivers through hardwired call buttons with call cords, emergency push stations, or emergency pull stations. The company?s Vigil Integrated Care Management System also includes Vigil Perimeter Monitoring, a bed monitoring system t hat offers an additional form of notification for those facilities where door alarms and resident smoke detectors may not be heard throughout the facility; Vigil Resident Check-In System that alerts staff when a resident is not well enough to have checked-in for the day; and Vigil Dementia System, which provides long-term care residents suffering from dementia and monitors resident rooms to detect unexpected behavior. Its solutions are used in independent living, assisted living, memory care, and skilled nursing facilities. Vigil Health Solutions Inc. is based in Victoria, Canada.
Top Consumer Service Stocks To Buy For 2014: Cowen Group Inc.(COWN)
Cowen Group, Inc. is a publicly owned asset management holding company. Through its subsidiaries, the firm provides alternative investment management, investment banking, research, and sales and trading services for its clients. It manages separate client focused portfolio through its subsidiaries. Through its subsidiaries, the firm invests in equity and fixed income markets. It also invests in alternative investments markets through its subsidiaries. Cowen Group, Inc. was founded in 1994 and is based in New York, New York with additional offices in Boston, Massachusetts, Chicago, Illinois, Cleveland, Ohio, Dallas, Texas, and San Francisco, California.Advisors' Opinion:
- [By Michael Brush]
The name isn't as common as others here, but you might remember the boutique investment banking and stock research shop Cowen Group (COWN). It helped hatch many of the midsize, high-growth tech and health-care companies during the late 1990s boom. Cowen itself went public in 2006, just in time to get trounced by an economic meltdown.
Since the economy's upward turn, Cowen's stock hasn't rebounded as well as bigger rivals like Goldman Sachs, GS. But its time will come, insists Anton Schutz, the manager of the Burnham Financial Industries Fund (BMFIX), which owns the stock. "In a true bull market, Cowen is capable of earning over $1 a share," says Schutz. Since boutique investment banks carry price-to-earnings ratios at least in the low teens in good times, this stock could double or even triple from recent levels of $4 a share, Schutz reasons.
Cowen recently purchased the brokerage LaBranche (LAB), whose presence on the Hong Kong stock exchange should help Cowen increase its investment banking business in China. "I expect this area to be of vital importance in growth for us," Cowen CEO and Wall Street veteran Peter Cohen said in the company's most recent conference call. LaBranche also gives Cowen much-needed electronic platfor ms supporting options and high frequency trading, says Sandler O'Neill analyst Devin Ryan, who has a $7 price target on the stock.
Asset management arm Ramius, which offers hedge funds and mutual funds, should continue to perform well as the stock market and economy rebound. These trends will also support Cowen's U.S. brokerage and investment banking businesses. "The smaller brokers don't need that many crumbs to fall off the table to make some really good money," Ryan says.
Meanwhile, Cowen's stock looks cheap, trading at about 70% of book value, compared with a 24% premium to book value at bigger rivals like Goldman Sachs (GS). That protects investors against downsi! de, and also makes Cowen a possible buyout target.
Top Consumer Service Stocks To Buy For 2014: Plains Exploration & Production Company(PXP)
Plains Exploration & Production Company, an independent oil and gas company, primarily engages in acquiring, developing, exploring, and producing oil and gas in California, Texas, and Louisiana. It owns oil and gas properties with principal operations in onshore California; offshore California; the Gulf Coast region, including Haynesville Shale, Eagle Ford Shale, and south and east Texas; the Mid-Continent region; and the Rocky Mountains. As of December 31, 2010, the company had estimated proved reserves of 416.1 million barrels of oil equivalent. Plains Exploration & Production Company was founded in 2002 and is headquartered in Houston, Texas.