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Alberto Abaterusso
Alberto Abaterusso
Articles (2145) 

A Trio of High-Quality Stocks for the Value Investor

Their balance sheets are robust

May 06, 2020 | About:

Benjamin Graham recommended picking U.S.-listed equities of companies that have a current ratio higher than 2 and more working capital than long-term debt, as this suggests robust balance sheets.

A current ratio higher than 2 means that a company has enough financial resources to reimburse its short-term creditors. The ratio is calculated by dividing the total current assets by the total current liabilities.

When working capital is higher than long-term debt, it means the business can generate more than it needs to meet the financial obligations stemming from long-term debt. The working capital is the difference between total current assets and total current liabilities.

In addition to meeting the above criteria, the following stocks have also received positive recommendation ratings from sell-side analysts on Wall Street.

AAON Inc

AAON Inc (NASDAQ:AAON) is a Tulsa, Oklahoma-based manufacturer and seller of air conditioning and heating systems in North America.

The stock has a current ratio of 3.35, which is better than the industry median of 1.54.

AAON has a trailing 12-month working capital of $127.85 million and no long-term debt as of the most recent full fiscal year.

GuruFocus assigned a high rating of 9 out of 10 for both the company’s financial strength and its profitability.

AAON traded at a share price of $46.13 at close on Tuesday for a market capitalization of $2.4 billion, a price-book ratio of 8.34 and a 52-week range of $40.48 to $60.

Wall Street sell-side analysts issued a hold recommendation rating with an average target price of $42.50 per share.

Dorman Products Inc

Dorman Products Inc (NASDAQ:DORM) is a Colmar, Pennsylvania-based provider of replacement parts and fasteners for several types of vehicles to businesses operating in the automotive aftermarket industry.

The company has a current ratio of 2.72, which is better than the industry median of 1.49.

Dorman Products has a trailing 12-month working capital of about $534.1 million and no long-term debt as of the most recent full fiscal year.

GuruFocus assigned a positive rating of 6 out of 10 for the company’s financial strength and a high rating of 8 out of 10 for its profitability.

Dorman Products traded at a price of $60.51 per share at close on Tuesday for a market capitalization of $1.96 billion, a price-book ratio of 2.47 and a 52-week range of $44.49 to $95.72.

Wall Street sell-side analysts issued a hold recommendation rating with an average target price of $61.50 per share.

Usana Health Sciences Inc

Usana Health Sciences Inc (NYSE:USNA) is a Salt Lake City, Utah-based manufacturer and seller of nutritional and personal care products.

The stock has a current ratio of 2.42, which is better than the industry median of 1.59.

Usana Health Sciences has trailing 12-month working capital of $193.2 million and no long-term debt as of the most recent full fiscal year.

GuruFocus assigned a high rating of 9 out of 10 for both the company’s financial strength and its profitability.

Usana Health Sciences traded at a price of $82.14 per share at close on Tuesday for a market capitalization of $1.77 billion, a price-book ratio of 5.56 and a 52-week range of $43.01 to $93.43.

Wall Street sell-side analysts issued an overweight recommendation rating with an average target price of $90 per share.

Disclosure: I have no positions in any securities mentioned.

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About the author:

Alberto Abaterusso
I am a contributor at GuruFocus. I primarily write about gold, silver and precious metals mining industries. My articles have also been widely linked by popular sites, including MarketWatch, Financial Times, 24hGold, Investopedia, Financial.org, CNBS, MSN Money, Zachs, Reuters and others. I hold a Master's Degree in Business Administration from Università degli Studi di Bari (Italy), Aldo Moro. I am based in The Netherlands.

You can follow me on Twitter at https://twitter.com/AAbaterusso

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