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Alberto Abaterusso
Alberto Abaterusso
Articles (2474) 

A Trio of High-Quality Stock Picks for the Value Investor

Their balance sheets look strong

November 01, 2020 | About:

If you screen the market for stocks that have a current ratio of more than 2 and more working capital than long-term debt as Benjamin Graham, the father of value investing, suggested, you could increase the chances of success for your investments.

When the current ratio is more than 2, the company has produced 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 is substantially above the long-term debt, it indicates the business can most likely meet all of the long-term obligations. The working capital results from total current assets minus total current liabilities.

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

Sun Hung Kai Properties

Sun Hung Kai Properties Ltd. (SUHJY) is a Hong Kong-based real estate company.

The stock has a current ratio of 2.91, which is more compelling than the industry median of 1.71.

Sun Hung Kai Properties has a trailing 12-month working capital of about $36.6 billion and long-term debt of about $11.1 billion as of the most recent fiscal year.

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

The stock traded at $12.89 per American depository receipt on Friday for a market capitalization of $37.36 billion, a price-book ratio of 0.51 and a 52-week range of $11.38 to $6.

Wall Street recommends a buy rating for this stock.

Baidu

Baidu Inc. (NASDAQ:BIDU) is a Beijing-based provider of web search services.

The stock has a current ratio of 2.85, which is more appealing than the industry median of 2.23.

Baidu has trailing 12-month working capital of about $15.4 billion and long-term debt of about $8.3 billion as of the most recent fiscal year.

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

The stock closed at $133.05 on Friday for a market capitalization of $45.38 billion, a price-book ratio of 1.97 and a 52-week range of $82 to $147.38.

Wall Street recommends an overweight rating for this stock.

POSCO

POSCO (NYSE:PKX) is a South Korean producer of steel rolled products and plates.

The stock has a current ratio of 2.07, which is more appealing than the industry median of 1.49.

POSCO has trailing 12-month working capital of nearly $16 billion and long-term debt of about $10.1 billion as of the most recent fiscal year.

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

The stock closed at $46.31 on Friday for a market capitalization of $14.75 billion, a price-book ratio of 0.37 and a 52-week range of $26.27 to $52.8.

Wall Street recommends a buy rating for this 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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Comments

joneshalcyonn
Joneshalcyonn - 2 months ago    Report SPAM

POSCO is for me the perfect stock pick! <a>no text</a>

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