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James Li
James Li
Articles (1346)  | Author's Website |

5 Tech Stocks With High Gross Margins Over the Past 5 Years

New GuruFocus feature identifies stocks with high profit margins over several years

According to the Historical Data Screen, one of our new features for GuruFocus Premium Plus users, five technology stocks that had high gross margins each year over the past five years were Ansys Inc. (NASDAQ:ANSS), Check Point Software Technologies Ltd. (NASDAQ:CHKP), iRobot Corp. (NASDAQ:IRBT), Jack Henry & Associates Inc. (NASDAQ:JKHY) and Synopsis Inc. (NASDAQ:SNPS).

Tech selloff continues despite early upswing

The Dow Jones Industrial Average closed near its intraday low of 27,547.87, down close to 1% from Wednesday's close of 27,940.47 despite reaching an intraday high of 28,174.78. Likewise, the tech-heavy Nasdaq Composite Index closed near the intraday low of 10,927.59, down over 1.5% from the previous close of 11,141.56. Big Tech stocks like Microsoft Corp. (NASDAQ:MSFT) and Apple Inc. (NASDAQ:AAPL) led the decline, each closing over 2.5% lower from the previous close.

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CNBC said that enhanced worries about a tech bubble contributed to the decline in tech stocks: Apple propelled the Nasdaq to record highs "despite the coronavirus pandemic's hit to the economy." Duquesne Family Office President Stanley Druckenmiller (Trades, Portfolio), who curbed his Big Tech holdings according to a second-quarter portfolio report, said in a Wednesday CNBC interview that the stock markets are experiencing a "post-party hangover" following a "humbling" market rally during late spring and summer.

Historical Data Screen seeks companies with favorable long-term prospects

According to the new feature announcement article, the Historical Data Screen allows users to screen for stocks using multiple years of data. For example, users can screen for stocks that have grown operating margins by at least 5% each year over the past five years. One can also screen for companies that have gross margins of at least 40% each year over the past five years, as discussed in the following video.

The above filters apply the "favorable long-term prospects" criterion from Berkshire Hathaway Inc. (NYSE:BRK.A)(NYSE:BRK.B) co-managers Warren Buffett (Trades, Portfolio) and Charlie Munger (Trades, Portfolio)'s four-criterion approach to value investing.

Ansys

Ansys provides simulation capabilities for structural, fluids, semiconductor power, embedded software, optical and electromagnetic properties. GuruFocus ranks the Canonsburg, Pennsylvania-based company's profitability 9 out of 10 on several positive investing signs, which include a five-star business predictability rank and profit margins that are outperforming over 94% of global competitors.

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Gurus with large holdings in Ansys include Ron Baron (Trades, Portfolio)'s Baron Funds and Chuck Akre (Trades, Portfolio)'s Akre Capital Management.

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Checkpoint Software

Checkpoint Software offers solutions for network, endpoint, cloud and mobile security. GuruFocus ranks the Israeli software company's financial strength and profitability 9 out of 10 on several positive investing signs, which include no long-term debt, a strong Altman Z-score of 8.25, a five-star business predictability rank and profit margins that are outperforming over 97% of global competitors.

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iRobot

iRobot designs and builds robots for indoor and outdoor activities, including cleaning, mapping and navigation, and physical solutions. GuruFocus ranks the Bedford, Massachusetts-based company's profitability 9 out of 10 on several positive investing signs, which include a four-star business predictability rank and a return on assets that outperforms over 90% of global competitors.

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Jack Henry

Jack Henry & Associates provides core processing systems to domestic banks and credit unions. GuruFocus ranks the Monett, Missouri-based company's financial strength and profitability 9 out of 10 on several positive investing signs, which include a high Piotroski F-score of 8, a strong Altman Z-score of 11, a four-star business predictability rank and a return on assets that outperforms 89.55% of global competitors.

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Synopsis

Synopsis provides software that automates the design and verification of integrated circuits and chip systems. GuruFocus ranks the Mountain View, California-based company's profitability 9 out of 10 on several positive investing signs, which include a five-star business predictability rank and an operating margin that has increased approximately 4.60% per year on average over the past five years and is outperforming over 85% of global competitors.

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Disclosure: The author is long Apple.

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About the author:

James Li
I am an editorial researcher at GuruFocus. I have a Master's in Finance from SMU, and I enjoy writing reports on financial trends and investor portfolios. Follow me on Twitter at @JamesLiGuru!

Visit James Li's Website


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