Identifying stocks that offer healthy returns may sometimes prove to be difficult for investors. In that case, one may consider liquidity levels, which are a good indicator of a company’s financial health. Liquidity is a measure of a company’s capability to meet short-term debt obligations. Stocks with high liquidity levels have consistently been in demand due to their potential to generate maximum returns.

Investors may want to consider adding four top-ranked stocks, such as Avino Silver & Gold Mines Ltd. ASM, Pagaya Technologies Ltd. PGY, EverQuote, Inc. EVER and Sezzle Inc. SEZL to their portfolio to boost returns.

However, one should be careful before investing in such stocks. While a high liquidity level may imply that the company is clearing its dues at a faster rate compared with peers, it may also suggest that the company is failing to utilize assets efficiently.

In addition to the liquidity level, an investor may also consider the efficiency of the company before investing in the stock. An efficient company with a favorable liquidity level may prove to be a profitable addition to one’s portfolio. 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 and 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 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 their industries 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: Higher asset utilization than the industry average indicates a company’s efficiency.

Zacks Rank equal to #1: 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 seven.

Here are four of the seven stocks that qualified the screen:

Avino Silver & Gold Mines is a Canada-based company involved in the exploration, development, and production of silver, copper, gold, and base metals.

ASM announced first-quarter 2025 production results with silver equivalent production increasing 8% year over year. Gold production jumped 25% while copper production was up 19% year over year. The company will report detailed quarterly results on May 13. In the fourth quarter of 2024, ASM’s revenues surged 95% year over year to $24 million. The top line beat the Zacks Consensus Estimate of $18 million. The upside was driven by higher production and realized silver and gold prices. ASM reported earnings per share of 7 cents for fourth-quarter 2024, which surpassed the Zacks Consensus Estimate of 3 cents per share. The company posted earnings of 2 cents in the year-ago quarter.

The Zacks Consensus Estimate for 2025 earnings is pegged at 8 cents per share, unchanged in the past seven days. ASM has a Growth Score of A and a trailing four-quarter earnings surprise of 94.44%, on average.

Pagaya Technologies is focused on building artificial intelligence infrastructure for the financial ecosystem and has offices in New York and Tel Aviv.

In the last reported quarter, total revenues and other income of $290 million jumped 18% year over year, driven by a 19% increase in revenues from fees. PGY also raised $1.4 billion through three transactions in the first quarter of 2025. It extended its funding network by three new investors, for a total of 135 funding partners. For the current quarter, Network Volume is expected to be between $2.3 billion and $2.5 billion. Total revenues and other income forecast to be between $290 million and $310 million.

The Zacks Consensus Estimate for PGY’s 2025 earnings is pegged at $1.76 per share, unchanged in the past seven days. The company has a Growth Score of A and a trailing four-quarter earnings surprise of 12.91%, on average.

EverQuote, headquartered in Cambridge, MA, is an online insurance marketplace. The company’s websites allow consumers to shop for auto, home, renters and life insurance.

EverQuote is benefiting from its exclusive data assets and technology, a deepened focus on core P&C markets and a robust financial profile. It is also focused on streamlining traffic operations, boosting AI-powered bidding solutions and rolling out advanced agent technology platforms, which position it well for long-term growth. Recovery in automotive and other insurance verticals bodes well. In the last reported quarter, total revenues of $166.6 million increased 83% year over year. Revenues in the Automotive insurance vertical increased 97% year over year to $152.7 million. Revenues in the Home and Renters insurance vertical totaled $13.9 million, which increased 10% year over year.

The Zacks Consensus Estimate for EVER’s 2025 earnings is pegged at $1.17 per share, down by 3 cents in the past seven days. The company has a Growth Score of A and a trailing four-quarter earnings surprise of 122.6%, on average.

Sezzle is a fintech company that operates a digital payment platform, mainly across the United States and Canada. This platform offers customers interest-free installment plans at online stores and certain in-store locations.

The company recently reported first-quarter 2025 results, wherein revenues jumped 123.3% year over year due to higher engagement and the continued lift from the WebBank partnership. As of March 31, 2025, SEZL had 658,000 monthly on-demand & subscribers. Management also raised the outlook for 2025, owing to strong demand in the first quarter and credit performance with the provision for credit losses as a percentage of gross merchandise value coming in below expectations. It expects total revenue growth of 60-65% compared with 25-30% mentioned earlier. Earnings per share are expected to be $3.25 compared with $2.21 stated earlier.

The Zacks Consensus Estimate for 2025 earnings is pegged at $3.24 per share, up 46.6% in the past 60 days. The company has a Growth Score of A and a trailing four-quarter earnings surprise of 159.9%, on average.

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Disclosure: Officers, directors and employees of Zacks Investment Research may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material. An affiliated investment advisory firm may own or have sold short securities and/or hold long and/or short positions in options mentioned in this material.

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This article originally published on Zacks Investment Research (zacks.com).

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