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Alberto Abaterusso
Alberto Abaterusso
Articles (2265) 

3 High-Quality Stocks for the Value Investor

Columbia Sportswear tops the list

August 13, 2020 | About:

To increase the likelihood of discovering high-quality companies, Benjamin Graham, the father of value investing, recommended screening for stocks with a current ratio of more than 2 and higher working capital than long-term debt.

A current ratio over 2 indicates a company has sufficient liquidity to pay its short-term creditors. 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 a wide margin, it means the business can most likely 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 since they meet these criteria.

Columbia Sportswear

Columbia Sportswear Co. (NASDAQ:COLM) is a Portland, Oregon-based apparel and footwear manufacturer.

The stock has a current ratio of 2.99, which is more appealing than the industry median of 1.59.

Columbia Sportswear has a trailing 12-month working capital of about $1.24 billion and no long-term debt as of the most recent fiscal year.

GuruFocus assigned a high rating of 8 out of 10 for the company's financial strength and profitability.

The stock was trading at $79 per share at close on Wednesday for a market capitalization of $5.2 billion, a price-book ratio of 3.15 and a 52-week range of $51.82 to $102.88.

Cooper Tire & Rubber

Cooper Tire & Rubber Co. (NYSE:CTB) is a Findlay, Ohio-based manufcaturer and marketer of tires.

The stock has a current ratio of 2.09, which is more compelling than the industry median of 1.5.

Cooper Tire & Rubber has a trailing 12-month working capital of $848.91 million and long-term debt of $309.15 million as of the most recent fiscal year.

GuruFocus assigned a positive rating of 6 out of 10 for the company's financial strength and a very good rating of 7 out of 10 for its profitability.

The stock was trading at $34.72 per share at close on Wednesday for a market capitalization of $1.76 billion, a price-book ratio of 1.49 and a 52-week range of $13.82 to $37.21.

Brady

Brady Corp. (NYSE:BRC) is a Milwaukee-based manufacturer and provider of identification solutions and workplace safety products for the identification and safeguard of premises, products and people.

The stock has a current ratio of 2.33, which is more appealing than the industry median of 1.65.

Brady has a trailing 12-month working capital of $331.34 million and no long-term debt as of the most recent fiscal year.

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

The stock was trading at $50.20 per share at close on Wednesday for a market capitalization of $2.58 billion, a price-book ratio of 3.16 and a 52-week range of $33 to $59.11.

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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