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By Larry Gellar

With all the recent news about sovereign debt, many investors are now taking a closer look at the companies they own to see what their debt situation is like. In fact, using the stock screener over at Finviz.com, we’ve found 5 stocks that offer the powerful combination of a < 0.1 long-term debt to equity ratio with a return on equity of > 40%. Also note that we limited the search to companies defined as large-cap ($10 billion to $200 billion) and that trade for less than 20 times earnings:

Accenture plc (NYSE:ACN) – ACN has performed solidly over the past year as the company’s consulting business has thrived. The stock has also been boosted by its recent addition to the S&P 500, which is important because many fund managers are required to have a certain amount of these stocks in their portfolios. Other investors have taken note as well as seen in another Seeking Alpha article. Important points mentioned are the stock’s strong technical factors as well as the recent earnings report, which was quite strong. Additionally, the company’s operations are very geographically diverse, with large operations in Europe, the U.S, and Asia. Note that Accenture also works in South America, Africa, and the Middle East. In fact, Accenture’s business is in demand with a wide variety of organizations, even snagging a contract from the Internal Revenue Service. We believe that this is yet another sign of the firm’s leadership in the consulting industry. Although IBM is of course a much larger company than Accenture with its hardware and software business, we still think that a comparison between the two companies is still worthwhile. In fact, Accenture offers better P/S and quarterly revenue growth than Big Blue. In addition, we are impressed with ACN’s cash flows – 3 of the past 4 quarters have been positive in this regard.

Coach Inc. (NYSE:COH) – Coach is about flat for the year, as investors try to determine whether demand for the company’s luxury products can be sustained. While the economy has clearly stagnated, some analysts believe that Coach’s higher-end market may not actually be affected too much. Regardless, the most recent consumer confidence reports suggest a possible downturn in business. As explained here though, Coach could still be a wise play for its global appeal. Many of the company’s profitability measures have increased considerably lately, and it seems unlikely that this will change for the worse. While Coach’s most comparable competitors are privately owned companies, COH’s valuation metrics are still reasonable next to others in the apparel industry. Additionally, although COH suffered a cash outflow of $203.89 million in 2010, the company has turned things around in 2011. So far, the company’s cash reserves are up $216.27 million, which needless to say makes up for 2010’s struggles. Coach executives too are excited about this stock, with plans for a $1.5 billion stock repurchase as well as a 50% increase in the quarterly dividend. In particular, Coach’s bags and accessories division is doing quite strong, and we believe this trend will continue into the future. Coach’s jewelry business should also do well in the months to come.

Gilead Sciences Inc. (NASDAQ:GILD) – GILD stock has performed quite well since September 2010 as investors have applauded the company’s recent acquisitions. Gilead’s HIV treatments have been particularly well received. In fact, Gilead is coming out with its second 3-drug combination for HIV patients as the recipe seeks FDA approval. The first combination, Atripla, has already been enormously successful. Gilead has also been in the news recently for its purchase of a facility from Genentech, and we believe that this should be useful as the company further expands its operations. Gilead is also notable for its beta of 0.36, and we believe this lack of volatility will continue since people require the company’s life-saving treatments no matter the economic circumstances. Additionally, GILD’s valuation metrics compare favorably to larger competitors like Bristol-Myers Squibb (NYSE:BMY) and GlaxoSmithKline (NYSE:GSK). Note that GILD’s P/E is only 10.60, while BMY’s is 13.72 and GSK’s is 18.91. GILD’s PEG is also quite attractive, currently 0.62. Margins look good too – gross margin and operating margin are 75.22% and 48.78% respectively. Although cash flow is flat for 2011 so far, this is merely because of the company’s prolific share repurchase program, and as such we are quite happy with Gilead’s financial position. Finally, look for GILD’s upcoming “quad regimen” to be another groundbreaking HIV treatment.

Mastercard Inc. (NYSE:MA) – MasterCard has done well in 2011 as companies rely on their financial solutions despite a poor economy. What has really allowed MA to take off though is the company’s success in the emerging markets. Discussed further here, consumers around the world are learning to rely on the company’s ever-popular debit and credit cards. Transaction volume has also increased significantly. In fact, some of the only bad news this company has experienced recently has been federal regulations that will limit the amount MasterCard can charge for debit transactions. Seeing as this is already factored into the stock price though, potential investors need not worry. On the other hand, MA compares poorly to competitors such as American Express (NYSE:AXP), Discovery (NYSE:DFS), and Visa (NYSE:V) on a couple of measures. Specifically, the stock’s P/E ratio of 18.82 and P/S of 6.80 are quite high compared to these other companies. Additionally, Visa has made some interesting deals in regards to mobile payments as explained here. MasterCard too has stayed competitive in this regard though, so we are confident in the company’s ability to adapt to future technology. Also, while MA’s cash flows are actually negative for 2011 so far, this is merely due to the company’s current stock repurchase program.

United Parcel Service, Inc. (NYSE:UPS) – Unfortunately for shareholders, the recent bear market has caused this stock to lose nearly all of its gains from the past 12 months. In fact, with cash per share of 5.75, UPS is clearly strong financially, but the problem remains that in this economy there is not much to invest in. Note that cash reserves are up by $1.321 billion since the beginning of 2011. With all this extra cash though, UPS has been able to post some nice dividends – dividend yield is currently 3.3%. For many investors though, there will still be a tough choice between UPS and FedEx (NYSE:FDX), and valuation metrics are currently split both ways. Specifically, UPS beats FDX in P/E (15.27 vs. 16.48), but FDX beats UPS in PEG (1.29 vs. 0.77). FDX has also been in the news lately with the announcement that many of its shipping rates will be going up. We think this will benefit Big Brown greatly as FedEx’s current customers turn to UPS to keep costs down in this tough economy. Additionally, UPS has received props on another Seeking Alpha article, which notes the company’s high target price (currently $87.09). UPS also scored low risk in categories such as board, audit, compensation, and shareholder benefits.

Source: 5 Safe Stocks to Buy While Very Cheap