Infosys Technologies Ltd. (INFY-N)

INFY operates as a global consulting firm and is now trading at 21.5x times' Forward P/E. In 1Q-2024, INFY’s revenue grew 4% to $4.62B, beating estimates of $4.61B and EPS was $0.17, slightly missing estimates of $0.18. The balance sheet is strong, with net cash of $1.1B. Over the last few years, the company generated solid cash flow which was returned mostly to shareholders through dividend increases and buybacks, we think the company has shareholder-friendly policies. The share price was under pressure due to the weak guidance for FY 2024, with growth for the whole year expected of around 1%-3.5%. We think given the challenging global economy, we think the result/guidance is acceptable. We would be comfortable holding at this valuation.
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Owned this for a couple years and did very well. A good company that is well run and has a strong balance sheet. The dividend grows. However, he sold it for Accenture which has a broader offering with media and government portions. The price is a little rich but it is high quality.

(A Top Pick Jul 26/19, Up 14%) Great company, nothing wrong with it. He sold it to put cash into Accenture, ACN, a better company with more global scope.

This is an Indian outsourcing company. The question is whether it can get things done cheaper than anyone else. They don’t do anything special, though they have executed well. He cautions that Indian companies and many other emerging market companies do not have the governance rules that American and Canadian investors have come to expect. Infosys is a huge player but its CFO recently left and there has been other management turnover. He does not see this as positive. This stock has had a big recent run, but this is not a growth stock like Amazon or Google. He would not invest at this price.

(A Top Pick July 7/17 Up 19%) The Trump Administration made this a better business as outsourcing became back in fashion. They have more cash flow than debt, a good balance sheet, and an attractive dividend profile. It may be a bit toppy here, but still some upside.

(A Top Pick July 7/17. Up 7.81%.) Bought this on the back of the Trump's Pro US/anti-everybody else campaign. A lot of tech sold off. This one dropped dramatically. It’s net cash, meaning there is more cash than debt. The last quarter they grew revenues by 25%. Have been growing revenues and earnings by double digits for the last 15 years. On Nov 1 they started a $2 billion share buyback. He is still buying for new clients.

An IT outsourcing company. When Mr. Trump got into power, the first thing he did was to bash all the foreigners, and a lot of the stocks, plus some of the tech stocks, were heavily reliant on this sector. Historically, it has had a very, very strong record of growing earnings something like 20% for 15 years. Very, very strong balance sheet. On Nov 1, they come into a $2 billion share buyback. Dividend yield of 2.7%. (Analysts’ price target is $15.50.)

(A Top Pick July 7/17. Down 0.95%.) If you ignore the last year or so, the stock had a fabulous run for about 15 years with double digit growth rates. Over a 3-5 year timeframe, he expects there will be a $2 billion share buyback announced, and the dividend should get increased. He is still buying this for clients.

An Indian outsourcing IT company. If you are a large US bank, and need your Visa system incorporated with a new bank you have just acquired, you get a company like this. The stock has had a fabulous run for the last 20 years, but since Pres. Trump got into power, and looking to turn America into “America for Americans” to keep foreigners out, that has impacted the whole IT outsourcing segment, so the stock is down 25%. There is a $2 billion buy share back in the works. Dividend yield of 2.6%. (Analysts’ price target is $15.)

She likes IT outsourcing. There are 3 of them including TCS Consulting (TCS-T), Cognizant (CTSH-Q) and this one. She doesn’t currently own Infosys or Cognizant because of Trump. There is chatter around the H1B Visa, which typically affects any skilled worker, especially in the Tech sector. She is a little concerned what effect this might have on the business model. Also, even before Trump, there had been a decline in their revenue backlog. The stock is not cheap enough for her to get involved yet.