3 Highly Profitable Business with Solid Conditions
- By Alberto Abaterusso
Investors searching for value opportunities could be interested in the three stocks listed below, as they represent equities in companies with high profitability and robust financial conditions. These qualities are represented by GuruFocus profitability and financial strength ratings of at least 7 out of 10.
Additionally, Wall Street sell-side analysts have issued positive ratings for them, suggesting that share prices are foreseen to perform well over the coming months.
SEI Investments Co
The first stock that makes the cut is SEI Investments Co (NASDAQ:SEIC), an Oaks, Pennsylvania-based asset management company.
GuruFocus rated its financial strength 9 out of 10, driven by a debt-Ebitda ratio of 0.07, which ranks better than 87.76% of 670 companies operating in the asset management industry, and by an Altman Z-Score of 14.5.
Furthermore, SEI Investments Co has a return on invested capital (ROIC) of 31.28%, which is well above the weighted average cost of capital (WACC) of 8.18%.
GuruFocus rated its profitability 9 out of 10, driven by a return on equity (ROE) ratio of 25.85% and a return on assets (ROA) ratio of 21.27%, ranking better than 91.42% and 92.68% of peers, respectively.
The share price ($59.28 as of March 24) has gained 29.32% over the past year for a market capitalization of $8.51 billion, a price-earnings ratio of 19.69 (versus the industry median of 18.72) and a price-book ratio of 4.89 (versus the industry median of 1.01).
The price-sales ratio is 5.24 (versus the industry median of 9.81) and the 52-week range is $35.41 to $62.45.
On Wall Street, as of March, the stock has a median recommendation rating of overweight and an average target price of $68.60 per share.
Gentex Corp
The second stock that makes the cut is Gentex Corp (NASDAQ:GNTX), a Zeeland, Michigan-based auto parts manufacturer, marketer and supplier.
GuruFocus rated its financial strength 9 out of 10, driven by a debt-Ebitda ratio of 0.05, which ranks better than 96.94% of 881 companies operating in the vehicles and parts industry, and by an Altman Z-Score of 23.91.
The ROIC of 21.72% is more than twice the WACC of 7.98%, suggesting that the investment is yielding back a higher return than the cost to raise the needed capital.
GuruFocus rated the company's profitability 8 out of 10, driven by a return on capital (ROC) ratio of 49.48%, which ranks better than nearly 94.55% of the 1,155 companies that are operating in the vehicles and parts industry. The industry has a median of 6.02%.
The share price ($34.24 as of March 24) has climbed 50.77% over the past year for a market capitalization of $8.34 billion, a price-earnings ratio of 24.28 (versus the industry median of 23.64) and a price-book ratio of 4.25 (versus the industry median of 1.56).
The price-sales ratio is 4.94 (versus the industry median of 0.83) and the 52-week range is $20.39 to $37.75.
On Wall Street, as of March, the stock has a median recommendation rating of overweight and an average target price of $38.25 per share.
Globant SA
The third stock that makes the cut is Globant SA (NYSE:GLOB), a Luxembourg-based application software provider serving several industries including media and entertainment, technology and telecommunications, professional services, healthcare, banks, insurance and retail.
GuruFocus rated its financial strength 7 out of 10, driven by an Altman Z-Score of 14.07, suggesting that the financial conditions of the company are stable.
The ROIC is 9.78% versus a WACC of 8.13%, which indicates the company's investments are still returning more than what it costs to raise the necessary funds.
GuruFocus rated the company's profitability 7 out of 10, driven by a three-year revenue growth rate of 21.4% (versus the industry median of 7.1%).
The share price ($208.98 as of March 24) has climbed by 133.76% over the past year for a market capitalization of $8.34 billion, a price-earnings ratio of 152.56 (versus the industry median of 32.13) and a price-book ratio of 9.47 (versus the industry median of 3.79).
The price-sales ratio is 10.2 (versus the industry median of 3.31) and the 52-week range is $70.83 to $244.72.
On Wall Street, as of March, the stock has a median recommendation rating of overweight with an average target price of $233.50 per share.
Disclosure: I have no positions in any securities mentioned.
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This article first appeared on GuruFocus.
