Investors seeking solid gains should add stocks with strong liquidity, which supports business growth. Liquidity measures a company’s capability to meet short-term debt obligations. Stocks with high liquidity levels have always been in demand, owing to their potential to provide maximum returns.
Investors may want to consider adding four top-ranked stocks — Etsy Inc ETSY, monday.com Ltd. MNDY, Semtech Corporation SMTC and Workiva WK— to their portfolios to boost returns.
However, one should be careful while investing in a stock with high liquidity levels. High liquidity may also indicate that the company cannot competently utilize its assets.
Besides sufficient cash, an investor might also consider a company’s capital deployment abilities before investing. A balanced assessment of both liquidity and efficiency can help identify truly promising investment opportunities.
Measures to Identify Liquid Stocks
Current Ratio: It measures current assets relative to current liabilities. The ratio gauges a company’s potential to meet short- and long-term debt obligations. A current ratio — the working capital ratio — below 1 indicates that the company has more liabilities than assets. A high current ratio does not always suggest that the company is in good financial shape. It may also indicate that the firm failed to utilize its assets significantly. Hence, a range of 1-3 is considered ideal.
Quick Ratio: Unlike the current ratio, the quick ratio — the “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. A quick ratio of more than 1 is desirable, like the current ratio.
Cash Ratio: This is the most conservative ratio among the three, considering cash, cash equivalents and invested funds relative to current liabilities. It measures a company’s ability to meet existing debt obligations using the most liquid assets. Though a cash ratio of more than 1 may suggest sound financials, a higher number may indicate inefficiency in cash utilization.
A ratio greater than 1 is always desirable, but it may not always represent a company’s financial condition.
Screening Parameters
To pick the best of the lot, we have added asset utilization — a widely used measure of a company’s efficiency — as one of the screening criteria. Asset utilization is the ratio of total sales in the past 12 months to the last four-quarter average of total assets. Though this ratio varies across industries, companies with a ratio higher than that of their industry can be considered efficient.
We added our proprietary Growth Score to the screen to ensure these liquid and efficient stocks have solid growth potential.
Current Ratio, Quick Ratio, and Cash Ratio between 1 and 3: While liquidity ratios greater than 1 are desirable, significantly high ratios may indicate inefficiency.
Asset utilization is more significant than the industry average: A higher asset utilization than the industry average indicates a company’s efficiency.
Zacks Rank equal to #1 (Strong Buy): Only Strong Buy-rated stocks can get through. You can see the complete list of today’s Zacks #1 Rank stocks here.
Growth Score less than or equal to B: Back-tested results show that stocks with a Growth Score of A or B handily beat other stocks when combined with a Zacks Rank #1 or 2 (Buy).
These criteria have narrowed the universe of more than 7,700 stocks to only 12.
Here are four of the 12 stocks that qualified the screen:
Etsy is a prominent e-commerce platform that operates the Etsy marketplace, connecting creative sellers with buyers across the globe. It also owned the fashion resale marketplace Depop (acquired by eBay), which is now classified as a discontinued operation.
The mobile app remains an important growth engine. App GMS increased 12.5% year over year in the second quarter and now represents about 47% of total GMS. Engagement is also improving, with visits per monthly active user and orders per visit rising year over year. The company is also experimenting with AI-native shopping experiences, including its conversational gifting assistant.
Etsy delivered improving marketplace momentum in the second quarter of 2026. Etsy marketplace GMS reached $2.6 billion, increasing 7.5% year over year and marking the third consecutive quarter of year-over-year GMS growth. Revenues totaled $668 million, while the take rate was 25.9%. For the third quarter of 2026, Etsy expects marketplace GMS of $2.53 billion to $2.58 billion, implying year-over-year growth of 4% to 6%.
The Zacks Consensus Estimate for ETSY’s 2026 earnings is pegged at $5.92 per share, unchanged in the past seven days. The company has a Growth Score of B.
monday.com specializes in the development of software applications. AI adoption is emerging as a big growth opportunity for the company. AI ARR doubled sequentially from the first quarter to the second quarter of 2026 and accounted for 17% of net new ARR added during the quarter. Second-quarter revenues of $364.6 million increased 22% year over year.
Customers generating more than $100,000 in ARR increased 37%, while those above $500,000 ARR jumped 68% year over year. Record net additions in both cohorts demonstrate that monday.com is successfully moving toward larger customers.
For the third quarter, monday.com expects revenues of $368-$370 million, implying 16%-17% year-over-year growth.
The Zacks Consensus Estimate for MNDY’s 2026 earnings is pegged at $5.55 per share, unchanged in the past seven days. The company has a Growth Score of B and an average trailing four-quarter earnings surprise of 23.56%.
Semtech manufactures high-performance semiconductor chips for AI data center networking and connected IoT devices.
The company is benefiting from strong data-center demand, particularly across its FiberEdge, CopperEdge and emerging photonics portfolio. The company’s photonics portfolio includes semiconductor optical amplifiers high-power lasers and high-speed photodiodes for scale-up, scale-out and scale-across data center connectivity applications.
Data-center revenues reached $100 million in the second quarter of fiscal 2027, up 39% sequentially and 91% year over year. The top line was supported by continued strength in 800G products and 1.6T CopperEdge as well as the ramp of 1.6T FiberEdge. LoRa represents another major growth engine. LoRa-enabled net sales increased 31% sequentially and 58% year over year to $58 million. Growing traction for the LoRa Gen 4 platform, including LoRa Plus and other RF protocols, bodes well. For the third quarter of fiscal 2027, Semtech expects net sales to be $410 million (+/- $5 million).
The Zacks Consensus Estimate for SMTC’s fiscal 2027 earnings is pegged at $3.48 per share, unchanged in the past seven days. The company has a Growth Score of A and an average trailing four-quarter earnings surprise of 9.82%.
Workiva offers an AI-driven platform for accounting, finance, sustainability, risk, and audit teams. Workiva expects third-quarter revenues to be in the range of $260 million to $262 million, with non-GAAP operating margins between 17% and 17.5%. Full-year revenues are expected to be in the range of $1.04 billion to $1.044 billion.
The company's second-quarter 2026 revenues jumped 19% to $255 million. The performance was driven by strong demand across the portfolio. Subscription & support revenues increased 19% year over year to $236 million.
Customers numbered 6,750 as of June 30, 2026, up 283 net customers from the prior-year period. Gross retention rate was 97%, while the net retention rate was 111%. Currently, 76% of subscription revenues come from multi-solution customers, up from 71% a year ago. Current remaining performance obligations were $789 million, up 18% year over year.
The Zacks Consensus Estimate for 2026 earnings is pegged at $3.30 per share, unchanged over the past seven days. The company has a Growth Score of A and an average trailing four-quarter earnings surprise of 24.11%.
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This article originally published on Zacks Investment Research (zacks.com).