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4 Solid Stock Picks for the Value Investor

These companies meet key criteria of Benjamin Graham

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Alberto Abaterusso
Sep 19, 2021

Summary

  • Snowflake Inc, Infosys Ltd, BioNTech SE and Micron Technology Inc have strong balance sheets.
  • They seem strong enough to stave off bankruptcy risk in the short, medium and long-term.
  • Wall Street is positive these stocks.
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Benjamin Graham, the father of value investing, recommended investors to look for stocks that have a current ratio higher than 2 and more working capital than long-term debt.

When the current ratio is higher than 2, the company has been able to produce more than enough liquidity to pay back its short-term creditors. The ratio is calculated as total current assets divided by total current liabilities.

When the working capital exceeds the long-term debt substantially, it means the business should be able to keep on honoring 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, since they hold the above criteria.

Snowflake Inc

The first stock to consider is Snowflake Inc (

SNOW, Financial), a San Mateo, California-based provider of a cloud-based data platform where companies can find meaningful insights for their businesses.

The stock has a current ratio of 5.15 versus the industry median of 2.

Snowflake Inc has trailing 12-month working capital of about $3.51 billion and zero long-term debt as of the most recent fiscal year.

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GuruFocus assigned a rating of 7 out of 10 to the company's financial strength.

The share price was $322.80 at close on Friday for a market capitalization of $97.13 billion and a 52-week range of $184.71 to $429.

Wall Street sell-side analysts issued a median recommendation rating of overweight and an average target price of about $326.60 per share for the stock.

Infosys Ltd

The second stock to consider is Infosys Ltd (

INFY, Financial), a provider of consulting, outsourcing, technology and next-generation digital services in North America and internationally.

The stock has a current ratio of 2.09, exceeding the industry median of 2.

Infosys Ltd has trailing 12-month working capital of about $5.04 billion and no long-term debt as of the most recent fiscal year.

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GuruFocus assigned a rating of 8 out of 10 to the company's financial strength.

The stock closed around $22.85 on Friday for a market capitalization of $96.24 billion and a 52-week range of $13.02 to $24.14.

Wall Street sell-side analysts issued a median recommendation rating of overweight and an average target price of $23.94 per share for the stock.

BioNTech SE

The third stock to consider is BioNTech SE (

BNTX, Financial), a Mainz, Germany-based biotechnology developer of immunotherapies for cancer and infectious diseases.

The stock has a current ratio of 2.67, which is more compelling than the industry median of 5.91.

BioNTech SE has trailing 12-month working capital of nearly $1.3 billion versus $281 million in long-term debt as of the most recent fiscal year.

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GuruFocus assigned a rating of 8 out of 10 to the company's financial strength.

The stock traded around $359.18 per share at close on Friday for a market capitalization of $87.11 billion and a 52-week range of $58.81 to $464.

Wall Street sell-side analysts issued a median recommendation rating of hold and an average target price of $296.03 per share for the stock.

Micron Technology Inc

The fourth stock to consider is Micron Technology Inc (

MU, Financial), a Boise, Idaho-based semiconductors manufacturer.

The stock has a current ratio of 3.4 versus the industry median of 2.28.

Micron Technology Inc has trailing 12-month working capital of about $11.33 billion versus total debt of $5.96 billion as of the most recent fiscal year.

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GuruFocus assigned a rating of 7 out of 10 to the company's financial strength.

The stock was trading around $74.30 at close on Friday for a market capitalization of $83.64 billion and a 52-week range of $46.50 to $96.96.

Wall Street sell-side analysts issued a median recommendation rating of buy and an average target price of $114.21 per share for the stock.

Disclosure: I have no positions in any securities mentioned.

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Disclosures

I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
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