Benjamin Graham, the father of value investing, recommended investors 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, it means there is more than enough liquidity to pay back short-term creditors. The ratio is calculated as total current assets divided by total current liabilities.
When the working capital substantially exceeds the long-term debt, it means the business is probably well prepared to satisfy any financial obligations arising because of long-term debt. 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 meet the above criteria and are recommended by Wall Street.
Nike
The first stock to consider is Nike Inc. (NKE, Financial), a Beaverton, Oregon-based designer and seller of athletic footwear, apparel and accessories.
The stock has a current ratio of 3.07 versus the industry median of 1.68.
Nike has 12-month working capital of approximately $18.32 billion and long-term debt of approximately $9.42 billion for the most recent fiscal quarter ended Nov. 30, 2021.
GuruFocus assigned a rating of 6 out of 10 to the company's financial strength.
The share price was $145.39 at close on Friday for a market capitalization of $229.90 billion and a 52-week range of $125.44 to $179.10.
Wall Street sell-side analysts issued a median recommendation rating of overweight and an average target price of about $184.93 per share.
BlackRock
The second stock to consider is BlackRock Inc. (BLK, Financial), a New York-based asset management company providing its services to individual and institutional investors as well as intermediaries.
The stock has a current ratio of 18.18, exceeding the industry median of 3.20.
BlackRock has a trailing 12-month working capital of about $24.08 billion and long-term debt of $6.47 billion as of the most recent quarter ended on Sept. 30.
GuruFocus assigned a rating of 5 out of 10 to the company's financial strength.
The stock closed around $809.82 on Friday for a market capitalization of $122.84 billion and a 52-week range of $670.28 to $973.16.
Wall Street sell-side analysts issued a median recommendation rating of buy and an average target price of $1,006.92 per share.
Shin-Etsu Chemical
The third stock to consider is Shin-Etsu Chemical Co. Ltd. (SHECY, Financial), a Japanese supplier of specific chemicals used in the PVC, paper, automotive, consumer electronics and cosmetics industries.
The stock has a current ratio of 5.44, which is more compelling than the industry median of 1.93.
Shin-Etsu Chemical has a trailing 12-month working capital of $15.81 billion versus $117 million in long-term debt as of the most recent quarter ended on Sept. 30.
GuruFocus assigned a rating of 8 out of 10 to the company's financial strength.
The stock closed at $42.42 per share on Friday for a market capitalization of $70.48 billion and a 52-week range of $38.86 to $48.91.
Wall Street sell-side analysts issued a median recommendation rating of overweight for the stock.
Edwards Lifesciences
The fourth stock to consider is Edwards Lifesciences Corp. (EW, Financial), an Irvine, California-based manufacturer of medical devices.
The stock has a current ratio of 3.64, which is more compelling than the industry median of 3.38.
Edwards Lifesciences has a trailing 12-month working capital of $2.55 billion versus $596 million in long-term debt as of the most recent quarter ended on Sept. 30.
GuruFocus assigned a rating of 7 out of 10 to the company's financial strength.
The stock closed at $112.18 per share on Friday for a market capitalization of $70.04 billion and a 52-week range of $78.44 to $131.73.
Wall Street sell-side analysts issued a median recommendation rating of overweight and an average target price of $129.55 per share.
