>
  1. How to use GuruFocus - Tutorials
  2. What Is in the GuruFocus Premium Membership?
  3. A DIY Guide on How to Invest Using Guru Strategies
Alberto Abaterusso
Alberto Abaterusso
Articles (2546) 

3 High-Quality Picks for the Value Investor

Alibaba Group Holding Ltd tops the list

January 15, 2021 | About:

Benjamin Graham, the father of value investing, suggested investors search for stocks that have a current ratio of over 2 and more working capital than long-term debt.

When the current ratio is higher than 2, the company has produced sufficient liquidity to pay back 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 that the business will likely not miss fulfilling any of its 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.

Alibaba Group Holding Ltd

The first stock that makes the cut is Alibaba Group Holding Ltd (NYSE:BABA), a Chinese internet retail giant.

The stock has a current ratio of 1.99, which appeals more than the industry median of 1.47.

Alibaba Group Holding Ltd has trailing 12-month working capital of about $31.487 billion and long-term debt of about $17.132 billion 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 9 out of 10 for its profitability.

The share price closed at $242.98 on Thursday for a market capitalization of $657.42 billion and a 52-week range of $169.95 to $319.32.

Wall Street sell-side analysts recommend 18 strong buys, 29 buys and one hold rating for the stock. The average target price is $324.80 per share.

Intuit Inc

The second stock that makes the cut is Intuit Inc (NASDAQ:INTU), a Mountain View, California-based business and financial software company.

The stock has a current ratio of 3.09, which is more compelling than the industry median of 1.9.

Intuit has trailing 12-month working capital of about $1.628 billion, which exceeds the long-term debt of $386 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 8 out of 10 for its profitability.

The stock closed at $365.51 on Thursday for a market capitalization of $100.17 billion and a 52-week range of $187.68 to $387.94.

Wall Street sell-side analysts recommend six strong buys, three buys, 11 holds and two underperform ratings for the stock. The average target price is $410.72 per share.

KE Holdings Inc

The third stock that makes the cut is KE Holdings Inc (NYSE:BEKE), a Beijing, China-based operator of an online platform for housing transactions and services in China.

The stock has a current ratio of 2.39, which appeals more than the industry median of 1.72.

KE Holdings Inc has trailing 12-month working capital of $3.438 billion and long-term debt of $698 million as of the most recent fiscal year.

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

The stock closed at $62.54 on Thursday for a market capitalization of $73.72 billion and a 52-week range of $31.79 to $79.40.

Wall Street sell-side analysts recommend three buys, five holds and one underperform rating for the stock for an average target price of $65.77 per share.

Disclosure: I have no positions in any securities mentioned.

Read more here:

Not a Premium Member of GuruFocus? Sign up for a free 7-day trial here.

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

Rating: 0.0/5 (0 votes)

Comments

Please leave your comment:



Performances of the stocks mentioned by Alberto Abaterusso


User Generated Screeners


pjmason14Momentum
wigbertHigh FCF-M2
kosalmmuse6
kosalmmuseBest one1
DBrizanall 2019Feb26
kosalmmuseBest one
DBrizanall 2019Feb25
kosalmmuseNice
kosalmmusehan
MsDale*52-Week Low
Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)