Among the various preset screeners that GuruFocus offers to help users identify potential value opportunities, one of the more popular ones is the "High Quality" screener.
This screener looks for the stocks of companies that live up to a wide range of high expectations for profitability, growth and financial strength, such as a financial strength score of at least 6 out of 10, a profitability score of at least 7 out of 10, a five-year revenue growth rate of 5% or more and a five-year earnings per share without non-recurring items growth rate of 10% or more, among others.
The stocks that meet these stringent criteria may not see their prices skyrocketing in a short period of time the same way that flashy tech initial public offerings do, but investors can be reasonably certain that in addition to a solid history of profitability and growth, these companies have the strength to weather difficult economic conditions better than most of their peers and competitors.
Therefore, investors may be interested in the following three stocks, as they meet the criteria for the High Quality screener. Additionally, these stocks are trading below the intrinsic value assigned to them by the GuruFocus Value chart, indicating they could be available at a discount compared to the combination of their past returns, historical valuation ratios and analyst estimates of future business performance.
Biogen
Biogen Inc. (BIIB, Financial) is a biotech company based in Cambridge, Massachusetts that researches and develops therapies for neurological and neurodegenerative diseases, including multiple sclerosis and leukemia.
Despite a strong existing drug lineup and pipeline, Biogen's share price has been all over the place the last few years as aducanumab, its candidate to treat Alzheimer's, has yet to gain regulatory approval following the completion of clinical trials.
Biogen has a financial strength rating of 6 out of 10 and a profitability rating of 9 out of 10. The five-year revenue growth rate is 13%, while the five-year earnings per share without NRI growth rate is 16.5%. The company has been profitable in all 10 of the past 10 years and has an operating margin of 46.78%, which beats 98% of industry peers.
On Dec. 16, shares of the company traded around $248.58 for a market cap of $38.25 billion and a price-earnings ratio of 8.23. The GuruFocus Value chart rates the stock as modestly undervalued.
Intel
Intel Corp. (INTC, Financial) is a semiconductor manufacturing company based in Santa Clara, California. The company is the world's largest producer of PC microprocessors, and its mobile processors have been a key driver of growth in recent years.
This is a tech company that still has a majority of its revenue coming from legacy businesses such as flash-memory (NAND). The revenue from these businesses is slowly but steadily declining as the transfer to cloud infrastructure continues. Intel's response has been to make use of acquisitions and divestitures in order to shift more of its operations to high-growth areas, but investors are still uncertain as to whether it will be able to pull this off in the long term.
Intel has a financial strength rating of 6 out of 10 and a profitability rating of 9 out of 10. The five-year revenue growth rate is 8.3%, while the five-year earnings per share without NRI growth rate is 16.9%. The company has been profitable in all 10 of the past 10 years and has an operating margin of 31.81%, which beats 95% of industry peers.
On Dec. 16, shares of the company traded around $50.84 for a market cap of $208.34 billion and a price-earnings ratio of 9.97. The GuruFocus Value chart rates the stock as modestly undervalued.
Check Point Software Technologies
Check Point Software Technologies Ltd. (CHKP, Financial) is an American-Israeli multinational provider of software and hardware products for IT security, which includes network security, endpoint security, cloud security, mobile security, data security and security management.
The stock price is still heading in a general uptrend, with the biggest recent snag being the Covid-19 market crash in February and March. Check Point operates in an industry that will see high growth in the coming years due to an increasing percentage of the world using the internet as well as the shift to the cloud. It is also shifting more of its revenue to a subscription basis.
Check Point has a financial strength rating of 9 out of 10 and a profitability rating of 9 out of 10. The five-year revenue growth rate is 10.9%, while the five-year earnings per share without NRI growth rate is 10.2%. The company has been profitable in all 10 of the past 10 years and has an operating margin of 44.12%, which beats 98% of industry peers.
On Dec. 16, shares of the company traded around $122.11 for a market cap of $17.12 billion and a price-earnings ratio of 20.8. The GuruFocus Value chart rates the stock as fairly valued.
Disclosure: Author owns no shares in any of the stocks mentioned. The mention of stocks in this article does not at any point constitute an investment recommendation. Investors should always conduct their own careful research and/or consult registered investment advisors before taking action in the stock market.
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