It's Wednesday, halfway home to the weekend.

Starting with today’s commentary, I plan to write every Wednesday about companies in Barchart.com’s Top 100 Stocks to Buy. If you’re unfamiliar with this list, it’s the top and bottom performing 100 stocks over the past year, weighted more heavily to recent activity.

So, for example. Super Micro Computer (SMCI) is the top-performing stock of the 100, up 760% over the past year, yet its weighted alpha is 558.29, still good enough for first place but evidence the stock’s momentum has slowed. Its shares are down 11% over the past five days.  

I’m looking at stocks with net cash positions on their balance sheets for today's commentary. They don’t have to have zero debt, but they must have more cash than debt and be profitable. 

As I write this early in Wednesday morning trading, three stocks jump out for me in the 9th, 22nd, and 68th positions within the top 100 stocks to buy.

Here's why I like each of them.

Camtek 

Camtek (CAMT) manufactures automatic optical inspection systems and related products. It is 25th out of 100 companies with a one-year return of 199.75% and a weighted alpha of 201.10. This means that its recent activity has been mildly positive to neutral. 

As of Dec. 31, 2023, the company's net cash position is $157.2 million. Its EBITDA profit is $69.5 million on $315.4 million in revenue, good for a 22.0% margin. Anything over 20% is always acceptable. 

Camtek reported Q4 2023 results on Tuesday. They were outstanding, although you might think differently, looking at its full-year revenue, which fell 1.7% from 2022. However, as CEO Rafi Amit noted in its press release, it received orders for nearly 300 of its systems in the second half of 2023, which explains the 8% increase in fourth-quarter revenue, a company record. 

On the bottom line, it earned a non-GAAP net income of $95.7 million in 2023, 27% higher than $90.5 million in 2022. That’s a 30.2% non-GAAP net profit margin. 

The company expects 2024 to be a record year. The 300 orders received in the second half mentioned earlier should generate $300 million in revenue in 2024. That’s without any additional growth throughout the year. 

Its business is looking good.  

Limbach Holdings 

Limbach Holdings (LMB) is 28th of the 100 companies with a one-year return of 234.79% and a weighted alpha of 180.70. This means that its recent activity has been mildly negative. 

As of Sept. 30, 2023, the company's net cash position is $18.8 million. Its EBITDA profit is $37.6 million on $517.1 million in revenue, good for a 7.3% margin. That’s not an unusual margin for the company, which designs, installs, and maintains MEP (mechanical, electrical, and plumbing) systems for infrastructure across the U.S.

I recommended Limbach last June. Its shares are up 68% since.

I noted at the time that its ODR (owner-direct relationships) business was performing exceptionally well, far better than its GCR (general contractor relationships). The ODR unit’s gross margin at the time was 27.1%, significantly higher than GCR. 

In November, the company reported reasonably strong Q3 2023 results that included a 4.4% increase in revenue to $127.8 million, with adjusted EBITDA of $13.6 million, 33.6% higher year-over-year. 

Its ODR business accounted for over 50% of Limbach’s revenue in the third quarter (51.5%) and 61.7% of its gross profit. Its gross margin was 29.5%, 10.2 percentage points higher than its GCR business. Not surprisingly, its gross margin improved by 420 basis points to 24.5%. 

The company expects to finish 2023 with $505 million in revenue at the midpoint of its guidance, with $43.5 million in adjusted EBITDA. 

New Oriental Education & Technology Group 

New Oriental Education & Technology Group (EDU) provides private educational services in China. It is 56th of the 100 companies with a one-year return of 125.75% and a 142.60 weighted alpha. This indicates recent activity has been positive. Its shares are up 29% over the past month. 

As of Nov. 30, 2023, the company's net cash position is $3.93 billion. Its EBITDA profit is $427.0 million on $3.58 billion in revenue, good for an 11.9% margin. 

New Oriental stock severely corrected in 2021 after the Chinese government took action to reduce education costs for families to increase the country’s sagging birth rate, partly due to these higher costs reducing the desire for more children.

Since the stock’s bottom in June 2022, when it traded near $10, its shares are up nearly 800%. 

What’s been the secret? Exceptional growth. 

At the end of January, EDU announced Q2 2024 results that included a 36.3% increase in revenue and a 957.8% increase in operating profit. Its non-GAAP net income of $50.2 million in the quarter was 182.6% higher than a year earlier. For the first half of 2024, its revenue was $1.97 billion, 42.4% higher year-over-year, with a non-GAAP income of $239.5 million, good for a 12.2% net margin, up from 7.3% in 2022.

Of the eight analysts that cover its stock, all eight rate it a Strong Buy (5 out of 5) with a target price of $89.21, where it’s currently trading. 

With the company expected to grow its Q3 2024 revenue by more than 40%, analysts will soon be forced to raise their target prices.  

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