As investors prepare for Halloween, a holiday where people trick-or-treat and scare away ghosts, five stocks with strong financial strength and trade near historically low price-sales ratios are Infosys Ltd. (INFY, Financial), NetEase Inc. (NTES, Financial), Cognizant Technology Solutions Corp. (CTSH, Financial), Cardinal Health Inc. (CAH, Financial) and ScanSource Inc. (SCSC, Financial).
Markets soar on strong earnings and U.S.-China trade deal optimism
On Friday, the Dow Jones Industrial Average closed at 26,958.06, 152.53 points higher than Thursday’s close of 26,805.53. Dow member Intel Corp. (INTC, Financial) contributed to the gains: Shares of the Santa Clara, California-based semiconductor company gained over 8% on the heels of reporting earnings and guidance that outperformed analysts' expectations.
CNBC added markets also received a boost on the U.S. Trade Representative’s comments that China and the U.S. were close to finalizing phase one of their trade deal.
Historical low-price sales screener overview
The historical low-price sales screener lists the stocks that have predictable revenue and earnings growth over the past 10 years that are trading at a price-sales ratio within 30% higher than historical lows. Gurus like Arnold Van Den Berg (Trades, Portfolio) and Ken Fisher (Trades, Portfolio) seek low price-sales stocks in their investing strategies.
Infosys
According to the low-price sales screen, Infosys is trading around 3.65% higher than its 52-week low.
The Indian consulting and information technology services company provides services like management consulting, application and infrastructure management, application outsourcing and business processing. GuruFocus ranks the company’s financial strength and profitability 9 out of 10 on several positive investing signs, which include robust interest coverage, a strong Altman Z-score of 11.45 and operating margins that outperform 88.83% of global competitors despite contracting over the past five years.
Gurus with large holdings in Infosys include Fisher, Jeremy Grantham (Trades, Portfolio) and Howard Marks (Trades, Portfolio)’ Oaktree Capital Management.
NetEase
NetEase provides a wide range of online services, which include mobile games, media, email and commerce. GuruFocus ranks the Beijing-based company’s financial strength 8 out of 10 on several positive investing signs, which include no long-term debt, a strong Altman Z-score of 5.45 and a solid Piotroski F-score of 7.
Gurus with large holdings in NetEase include Philippe Laffont (Trades, Portfolio) and Pioneer Investments (Trades, Portfolio).
Cognizant
Teaneck, New Jersey-based Cognizant provides technology consulting, application outsourcing, systems integration, business process services and cloud services. GuruFocus ranks the company’s financial strength 8 out of 10 on several positive investing signs, which include robust interest coverage and a solid Altman Z-score of 6.98.
Gurus with holdings in Cognizant include Dodge & Cox and former U.S. Vice President Al Gore (Trades, Portfolio).
Cardinal Health
Dublin, Ohio-based Cardinal Health distributes pharmaceuticals and medial supplies to pharmacies and hospitals. GuruFocus ranks the company’s profitability 8 out of 10 on several positive investing signs, which include a strong Piotroski F-score of 7 and a return on equity that outperforms 94.64% of global competitors. Despite this, Cardinal Health’s operating margin has declined over the past five years and is underperforming 68.97% of global medical distribution companies.
ScanSource
Greenville, South Carolina-based ScanSource provides value-added services for technology manufacturers and sells to retailers in specialty technology markets. GuruFocus ranks the company’s financial strength 6 out of 10: ScanSource has a strong Altman Z-score of 3.51 despite a debt-to-Ebitda ratio of 2.82, a ratio that underperforms 61.46% of global competitors.
Disclosure: No positions.
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