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To sum up, here's the list of criteria I used:
* Return on Invested Capital greater than 15%
* Enterprise Value to EBITDA less than 6
* Free Cash Flow to Operating Income greater than 75%
* Total Debt to Invested Capital less than 30%
* Capital Expenditures to Property, Plant, and Equipment greater than 30%
And here are the dozen stocks that resulted from this screen (using data available as of Feb. 27, 2009):
| Company | Symbol | Market Cap ($mil) | ROIC | EV/EBITDA | FCF to Oper. Income | TD/EBITDA | Capex to PP&E |
|---|---|---|---|---|---|---|---|
| Autodesk | ADSK | 2,872 | 30% | 3.2 | 124% | 6.7% | 75% |
| Robert Half International | RHI | 2,326 | 24% | 4.0 | 90% | 0.7% | 49% |
| T. Rowe Price Group | TROW | 5,820 | 20% | 5.7 | 87% | 0.0% | 36% |
| Adobe Systems | ADBE | 8,754 | 19% | 5.3 | 110% | 28.2% | 36% |
| EZCORP | EZPW | 467 | 18% | 5.2 | 87% | 11.2% | 41% |
| QLogic | QLGC | 1,118 | 16% | 3.3 | 98% | 0.0% | 31%
|
| Sapient | SAPE | 488 | 15% | 4.9 | 122% | 0.0% | 55% |
| Comfort Systems USA | FIX | 368 | 16% | 3.4 | 126% | 13.1% | 47% |
| Accenture | ACN | 17,729 | 77% | 4.8 | 96% | 0.2% | 38% |
| NeuStar | NSR | 1,221 | 18% | 5.3 | 87% | 9.1% | 40% |
| Net 1 UEPS Technologies | UEPS | 806 | 23% | 5.7 | 94% | 26.1% | 71% |
| Teradata | TDC | 2,721 | 36% | 5.9 | 117% | 0.0% | 39% |
Tortoriello is an analyst for Standard & Poor's Equity Research Services. He is the author of Quantitative Strategies for Achieving Alpha, published by McGraw-Hill in November, 2008.