A trio of actions with solid reliability

Benjamin Graham, the father of value investing, recommended investors look for stocks that have a current ratio greater than 2 and more working capital than long-term debt.

If the current ratio is above 2, it means there is enough cash to repay short-term creditors. The ratio is calculated as total current assets divided by total current liabilities.

When working capital significantly exceeds the amount of long-term debt, it means the business is likely well prepared to meet any financial obligations arising from the debt. Working capital is the difference between total current assets and total current liabilities.

Thus, investors may consider the following stocks as they meet the above criteria and have positive ratings on Wall Street.

Farfetch

The first stock to consider is Farfetch Ltd. (FTCH, Financial), a London-based operator of an online marketplace for luxury fashion items in the UK and overseas.

The stock has a current ratio of 2.05 compared to the industry median of 1.57.

Farfetch had working capital of approximately $913 million and long-term debt of $530.1 million in the quarter ended March 30.

GuruFocus gave a rating of 5 out of 10 to the financial strength of the company.

The stock price was $8.94 in early trading Wednesday for a market cap of $3.40 billion and a 52-week range of $6.52 to $47.30.

Wall Street sell-side analysts issued a median recommendation rating of overweight and an average target price of $16.47 per share for the stock.

Morgan Stanley is the company’s largest shareholder with 9.75% of all shares outstanding.

Baillie Gifford (Trades, Portfolio) is second with 9.13% and T. Rowe Associates Inc. is third with 5.58%.

Enovix

The second stock to consider is Enovix Corp. (ENVX, Financial), a Fremont, California-based company that designs, develops and manufactures lithium-ion batteries.

The stock has a current ratio of 22.79, beating the industry median of 1.94.

Enovix has working capital of approximately $372 million in the quarter ended June 30 and has no long-term debt.

GuruFocus gave the financial strength of the company a score of 7 out of 10.

The stock was around $20.99 in early trading Wednesday for a market cap of $3.29 billion and a 52-week range of $7.26 to $39.48.

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Wall Street sell-side analysts have issued a median buy recommendation rating and an average target price of $31 per share for the stock.

Among the company’s top fundholders, Eclipse Ventures LLC holds the largest position with 11.21% of shares outstanding. Park West Asset Management LLC follows in second place with 9.40%, while Vanguard is third with 6.45%.

Hunter

The third stock to consider is Huntsman Corp. (HUN, Financial), a manufacturer and marketer of differentiated organic chemicals based in Woodlands, Texas.

The stock has a current ratio of 2.12, which is more compelling than the industry median of 1.91.

Huntsman’s working capital was $1.82 billion in the quarter ended June 30. It also has long-term debt of $1.51 billion.

GuruFocus gave the financial strength of the company a score of 7 out of 10.

The stock traded at $30.46 per share in early trading Wednesday for a market cap of around $6.14 billion and a 52-week range of $24.09 to $41.65.

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Wall Street sell-side analysts issued a median recommendation rating of overweight and an average target price of about $39.63 per share for the stock.

Among the company’s major fundholders, Vanguard Group holds the largest position with 9.25% of shares outstanding. BlackRock Inc. is second with 6.53% and First Trust Advisors LP is third with 4.26%.

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