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 likely well prepared to satisfy any financial obligations arising because of long-term debt. 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.
Veru Inc.
The first stock to consider is Veru Inc. (VERU, Financial), a Miami, Florida-based oncology biopharmaceutical company that mainly focuses on developing novel therapies for breast and prostate cancers.
The stock has a current ratio of 10.45 versus the industry median of 5.72.
Veru Inc. has trailing 12-month working capital of approximately $132 million and long-term debt of approximately $9.6 million for the most recent quarter ended Dec. 30, 2021.
GuruFocus assigned a rating of 8 out of 10 to the company's financial strength.
The share price was $13.16 at close on Tuesday for a market capitalization of $1.05 billion and a 52-week range of $4.34 to $17.5.
Wall Street sell-side analysts issued a median recommendation rating of buy and an average target price of about $29.20 per share for the stock.
Roku Inc.
The second stock to consider is Roku Inc. (ROKU, Financial), a Los Gatos, California-based TV streaming platform operator.
The stock has a current ratio of 4.19, exceeding the industry median of 1.69.
Roku Inc. has trailing 12-month working capital of about $2.325 billion and long-term debt of $80 million as of the most recent quarter ended Dec. 30, 2021.
GuruFocus assigned a rating of 8 out of 10 to the company's financial strength.
The stock closed around $91.76 on Tuesday for a market capitalization of $11.77 billion and a 52-week range of $85.45 to $490.761.
Wall Street sell-side analysts issued a median recommendation rating of overweight and an average target price of $171.20 per share for the stock.
Barrick Gold Corporation
The third stock to consider is Barrick Gold Corporation (GOLD, Financial), a Canadian miner of gold and other precious metals with mineral assets located in North and South America, Africa and Saudi Arabia.
The stock has a current ratio of 3.95, which is more compelling than the industry median of 3.21.
Barrick Gold Corporation has trailing 12-month working capital of $6.163 billion versus $5.396 billion in long-term debt as of the most recent quarter ended Dec. 30, 2021.
GuruFocus assigned a rating of 5 out of 10 to the company's financial strength.
The stock closed at $22.37 per share on Tuesday for a market capitalization of approximately $40.3 billion and a 52-week range of $17.27 to $26.07.
Wall Street sell-side analysts issued a median recommendation rating of overweight and an average target price of $28.11 per share for the stock.
Tencent Music Entertainment Group
The fourth stock to consider is Tencent Music Entertainment Group (TME, Financial), a Chinese online music entertainment platform providing music streaming, online karaoke and live streaming services to people in mainland China.
The stock has a current ratio of 2.56, which is slightly more compelling than the industry median of 2.52.
Tencent Music Entertainment Group has trailing 12-month working capital of $2.571 billion versus $796.5 million in long-term debt as of the most recent quarter ended Dec. 30, 2021.
GuruFocus assigned a rating of 8 out of 10 to the company's financial strength.
The stock closed at $4.05 per share on Tuesday for a market capitalization of $6.77 billion and a 52-week range of $2.95 to $19.84.
Wall Street sell-side analysts issued a median recommendation rating of overweight and an average target price of approximately $6.86 per share for the stock.
