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3 Companies With High Quality Balance Sheets to Consider

These stocks meet key criteria of Benjamin Graham

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Feb 10, 2021
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If you screen the market for stocks that have a current ratio higher than 2 and more working capital than long-term debt, as Benjamin Graham, the pioneer of value investing, recommended, the chances that your investments will be successful should increase.

When the current ratio is higher than 2, the company has produced enough 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 surpasses the long-term debt by a large margin, it means that the business will probably 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.

Guardant Health Inc

The first stock that qualifies is Guardant Health Inc (

GH, Financial), a Redwood City, California-based provider of blood tests, data sets and analytics for cancer diagnostics and research in the United States and internationally.

The stock has a current ratio of 15.11, which appeals more than the industry median of 2.53.

Guardant Health has a trailing 12-month working capital of about $524.63 million and no long-term debt 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 1 out of 10 for its profitability.

The share price closed at $163.34 on Tuesday for a market capitalization of $16.33 billion and a 52-week range of $55.90 to $168.52.

Wall Street sell-side analysts recommend two strong buys and two buys for an average target price of $161.89 per share.

Ascendis Pharma A/S

The second stock that qualifies is Ascendis Pharma A/S (

ASND, Financial), a Danish biopharmaceutical developer of various pro-drug treatments for several unmet medical needs.

The stock has a current ratio of 14.80, which appeals more than the industry median of 4.9.

Ascendis Pharma has a trailing 12-month working capital of about $625.75 million and no long-term debt 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 2 out of 10 for its profitability.

The stock closed at $154.08 per share on Tuesday for a market capitalization of $8.28 billion and a 52-week range of $92 to $183.98.

Wall Street sell-side analysts recommend three strong buys, two buys and one hold rating for an average target price of $192.12 per share.

Turning Point Therapeutics Inc

The third stock that qualifies is Turning Point Therapeutics Inc (

TPTX, Financial), a San Diego, California-based clinical-stage biopharmaceutical developer of specific therapies for tumors.

The stock has a current ratio of 35.45, which appeals more than the industry median of 4.90.

Turning Point Therapeutics has trailing 12-month working capital of $400.92 million and no long-term debt 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 1 out of 10 for its profitability.

The stock closed at $136.38 on Tuesday for a market capitalization of $6.57 billion and a 52-week range of $31.30 to $141.30.

Wall Street sell-side analysts recommend five strong buys and five buys for an average target price of $159.60 per share.

Disclosure: I have no positions in any securities mentioned.

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