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Alberto Abaterusso
Alberto Abaterusso
Articles (2474) 

3 High Quality Stock Picks for the Value Investor

Their balance sheets look strong

October 08, 2020 | About:

Benjamin Graham, the pioneer of value investing, recommended investors to screen the market for stocks that have a current ratio of more than 2 and more working capital than long-term debt.

A current ratio that exceeds 2 tells that the company can generate enough liquidity to reimburse its short-term creditors. The ratio is calculated by dividing the total current assets by the total current liabilities.

When the working capital surpasses the long-term debt by a wide margin, it means that the business is likely able to meet all of the long-term debt 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 criteria.

Gildan Activewear Inc

Gildan Activewear Inc (NYSE:GIL) is a Canadian manufacturer and seller of apparel products in North America and internationally.

The stock has a current ratio of 4.74, which is more compelling than the industry median of 1.61.

Gildan Activewear Inc has a trailing 12-month working capital of nearly $1.1 billion, which, as of the end of the most recent fiscal year, surpasses the long-term debt of $845 million.

GuruFocus assigned a rating of 4 out of 10 for the company's financial strength and a rating of 9 out of 10 for its profitability.

The stock price traded at $21.03 per share at close on Wednesday for a market capitalization of $4.15 billion, a price-book ratio of 2.9 and a 52-week range of $9.42 to $35.59.

Wall Street recommends an overweight rating with an average target price of $18.03 per share for this stock.

Brooks Automation Inc

Brooks Automation Inc (NASDAQ:BRKS) is a Chelmsford, Massachusetts-based provider of automation and cryogenic solutions for the semiconductor capital equipment and life sciences sample management markets in North America and internationally.

The stock has a current ratio of 2.93, which appeals more than the industry median of 2.21.

Brooks Automation Inc has trailing 12-month working capital of nearly $375 million, exceeding the long-term debt of $50.31 million as of the most recent fiscal year, which ended on Sept. 28, 2019.

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

The stock price was trading at $50.74 per share at close on Wednesday for a market capitalization of $3.74 billion, a price-book ratio of 3.19 and a 52-week range of $21.19 to $57.56.

Wall Street recommends an overweight rating with an average target price of $56 per share for the stock.

The Shyft Group Inc

The Shyft Group Inc (NASDAQ:SHYF) is a Novi, Michigan-based manufacturer and seller of specialty and heavy-duty vehicles.

The stock has a current ratio of 2.1, which is more appealing than the industry median of 1.68.

The below chart exhibits that Shyft Group Inc has a trailing 12-month working capital of $94.85 million, which is surpassing the long-term debt of $88.67 million as of the most recent fiscal year.

GuruFocus assigned a rating of 7 out of 10 for the company's financial strength and a rating of 5 out of 10 for its profitability.

The stock price traded at $21.43 per share at close on Wednesday for a market capitalization of $762.16 million, a price-book ratio of 4.23 and a 52-week range of $9.01 to $21.96.

Wall Street recommends a buy rating with an average target price of $24 per share for the stock.

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 how to pick potential value stocks. Gold, silver and precious metals mining industries is also my cup of tea. 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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