Top IT Stocks Rated by Warren Buffett's Strategy

A recent report highlights Cognizant Technology Solutions and Cisco Systems as top-rated large-cap growth stocks in the IT sector, based on Warren Buffett's investment strategy. Both companies exhibit strong fundamentals but face challenges regarding retained earnings and expected returns.

Date: 11-09-2024

AI Rating: 5

The report discusses the performance of two major Information Technology stocks, Cognizant Technology Solutions Corp (CTSH) and Cisco Systems Inc (CSCO), evaluated through Warren Buffett's investment strategy.

1. COGNIZANT TECHNOLOGY SOLUTIONS CORP (CTSH)
The stock achieved a rating of 72%, demonstrating satisfactory fundamentals. Key highlights include:

Earning Predictability: PASS
Debt Service: PASS
Return on Equity (ROE): PASS
Free Cash Flow (FCF): PASS
Use of Retained Earnings: FAIL
Expected Return: FAIL

The failures concerning the use of retained earnings and expected returns could indicate the need for a reassessment in management strategy, potentially affecting investor sentiment negatively.

2. CISCO SYSTEMS INC (CSCO)
Like Cognizant, Cisco also received a rating of 72%. The notable points include:

Earning Predictability: PASS
Debt Service: PASS
Return on Equity (ROE): PASS
Free Cash Flow (FCF): PASS
Use of Retained Earnings: FAIL
Expected Return: FAIL

Similar to Cognizant, Cisco's failure in the use of retained earnings and expected returns suggests potential periodical challenges which may deter aggressive investor interest.

Overall, while both companies show strength in profitability, the negative indicators regarding retained earnings and expected returns may impose a cautionary outlook for investors.

Stocks: CTSH CSCO