3 Stocks With Solid Financial Strength

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, it means that 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 that 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.

Microsoft Corp

The first stock to consider is Microsoft Corp. (

MSFT, Financial), a Redmond, Washington-based developer, manufacturer, licensor and seller of computer software, personal computers and consumer electronics.

The stock has a current ratio of 2.16 versus the industry median of 2.05.

Microsoft Corp has a trailing 12-month working capital of about $93.798 billion and long-term debt of about $50.039 billion 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 share price was $341.95 at close on Wednesday for a market capitalization of $2.56 trillion and a 52-week range of $211.94 to $349.67.

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Wall Street sell-side analysts issued a median recommendation rating of buy and an average target price of about $370.51 per share for the stock.

Meta Platforms Inc.

The second stock to consider is Meta Platforms Inc. (

FB, Financial), a Menlo Park, California-based social media giant.

The stock has a current ratio of 4.23, exceeding the industry median of 2.62.

Meta Platforms Inc. has a trailing 12-month working capital of about $57.609 billion and long-term debt of $11.554 billion 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 around $342.94 on Wednesday for a market capitalization of $961.22 billion and a 52-week range of $244.61 to $384.33.

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Wall Street sell-side analysts issued a median recommendation rating of overweight and an average target price of $397.41 per share for the stock.

Broadcom Inc.

The third stock to consider is Broadcom Inc. (

AVGO, Financial), a San Jose, California-based manufacturer and distributor of various semiconductors worldwide.

The stock has a current ratio of 2.64, which is more compelling than the industry median of 2.41.

Broadcom Inc. has a trailing 12-month working capital of nearly $10.305 billion versus $39.440 billion in long-term debt as of the most recent fiscal quarter ended on Oct. 30.

GuruFocus assigned a rating of 4 out of 10 to the company’s financial strength.

The stock closed at $672.61 per share on Wednesday for a market capitalization of $277.86 billion and a 52-week range of $419.14 to $677.76.

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Wall Street sell-side analysts issued a median recommendation rating of buy and an average target price of $692.58 per share for the stock.

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