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Alberto Abaterusso
Alberto Abaterusso
Articles (2201) 

A Trio of High-Quality Stocks for the Value Investor

These companies have robust balance sheets

July 08, 2020 | About:

To enhance the chance to unearth high-quality companies, Benjamin Graham, the pioneer of value investing, recommended to select stocks with a current ratio of more than 2 and higher working capital than long-term debt.

A current ratio of more than 2 indicates that a company has enough funds to pay its short-term obligations. The ratio is calculated by dividing the total current assets by the total current liabilities.

When the working capital exceeds the long-term debt by an adequate amount, it means that the business is likely able to generate more than what is required to meet all of the long-term obligations. The working capital is the difference between total current assets and total current liabilities.

Thus, investors may want to consider the following stocks, as they meet the above listed criteria.

SKF AB

SKF AB (SKFRY) is a Swedish provider of industrial machine parts and lubrication systems.

The stock has a current ratio of 2.1, which is more compelling than the industry median of 1.86.

SKF AB has a trailing 12-month working capital of about $2.6 billion and long-term debt of $1.3 billion as of the most recent full fiscal year.

GuruFocus assigned a positive rating of 6 out of 10 for the companys financial strength and a good rating of 7 out of 10 for its profitability.

The stock price traded at $19.53 per share at close on Tuesday for a market capitalization of $8.89 billion, a price-book ratio of 2.17 and a 52-week range of $11.13 to $21.10.

Strategic Education Inc

Strategic Education Inc (NASDAQ:STRA) is a Herndon, Virginia-based provider of education and other training services in the U.S.

The stock has a current ratio of 3.31, which is more appealing than the industry median of 1.3.

Strategic Education Inc has a trailing 12-month working capital of $367.3 million and no long-term debt as of the most recent full fiscal year.

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

The stock price traded at $157.93 per share at close on Tuesday for a market capitalization of $3.51 billion, a price-book ratio of 2.4 and a 52-week range of $108.90 to $189.79.

Omega Flex Inc

Omega Flex Inc (NASDAQ:OFLX) is an Exton, Pennsylvania-based manufacturer and seller of flexible metal tubes in the U.S. and internationally.

The stock has a current ratio of 2.83, which is more compelling than the industry median of 1.86.

Omega Flex Inc has a trailing 12-month working capital of $25.84 million and no long-term debt as of the most recent full fiscal year.

GuruFocus assigned a good rating of 7 out of 10 for the companys financial strength and a high rating of 8 out of 10 for its profitability.

The stock price traded at $101.01 per share at close on Tuesday for a market capitalization of $1.02 billion, a price-book ratio of 26.33 and a 52-week range of $50.38 to $119.89.

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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