A Trio of High-Quality Stocks for the Value Investor

Their balance sheets and businesses generate ample cash to match short term needs

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Alberto Abaterusso
Apr 23, 2020
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To enhance the likelihood to uncover high-quality companies, Benjamin Graham, the father of value investing, recommended choosing stocks with a current ratio of more than two and higher working capital than long-term debt.

These two metrics indicate whether the company is able to produce enough funds to sustain the business and refund both short-term and long-term lenders.

The current ratio is calculated by dividing total current assets by total current liabilities, while the working capital is the difference between total current assets and total current liabilities.

Tootsie Roll Industries Inc

Tootsie Roll Industries Inc (

TR, Financial) is a Chicago-based manufacturer and seller of confectionery products in North America and Mexico.

The company’s current ratio of 4.44 is better than the industry median of 1.6.

Tootsie Roll Industries Inc has a trailing 12-month working capital of about $274 million and a trailing 12-month long-term debt of $7.5 million as of the most recent full fiscal year.

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GuruFocus assigned a very good rating of 7 out of 10 for both the financial strength and the profitability of the company.

Tootsie Roll Industries Inc’s stock closed at a price of $36.24 per share on April 22 for a market capitalization of $2.36 billion and for a price-earnings ratio of 21.07.

Heartland Express Inc

Heartland Express Inc (

HTLD, Financial) is a North Liberty, Iowa-based trucking company in North America.

The company’s current ratio of 2.39 is better than the industry median of 1.13.

Heartland Express Inc has a trailing 12-month working capital of $88.4 million and no long-term debt as of the most recent full fiscal year.

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GuruFocus assigned the close to the top rating of 9 out of 10 for the company's financial strength and a very good rating of 7 out of 10 for its profitability.

Heartland Express Inc’s stock closed at a price of $18.98 per share on April 22 for a market capitalization of $1.55 billion and for a price-earnings ratio of 21.33.

Wall Street issued a hold recommendation rating for this stock with an average target price of about $19.13 per share.

NVIDIA Corp

Based in Santa Clara, California, NVIDIA Corp (

NVDA, Financial) produces graphics processing units and system on chip units for the consumer electronics, computer hardware, semiconductors and video game industries.

The company’s current ratio of 7.67 is much better than the industry median of 2.26.

NVIDIA Corp has a trailing 12-month working capital of nearly $12 billion and a trailing 12-month long term debt of nearly $2 billion as of the most recent full fiscal year.

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GuruFocus assigned a high rating of 8 out of 10 for the company’s financial strength and the highest rating possible of 10 out of 10 for its profitability.

NVIDIA Corp closed at a price of $286.15 per share on April 22 for a market capitalization of $175.12 billion and a price-earnings ratio of 63.31.

Wall Street issued a strong buy recommendation rating for this stock with an average target price of $306.14 per share.

Disclosure: I have no positions in any securities mentioned.

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