Another Turn at InfoSys

InfoSys (INFY) Infosys Limited (INFY) provides IT services in business consulting, technology, engineering and outsourcing services. Infosys is based in India and has 160,000 employees.

[PostStockWidget stock_valuation="" pricetype="live" manual_date="Dec. 21, 2012, 2:04pm GMT" symbolcodes="'INFY'" symbolprices="30" div_align="right"]

• We bought INFY in April 2015 at $15.50 (adjusted for 2:1 stock split). We are now taking profits because of the high P/E relative to the growth rate in earnings for the next year (forecasts have come down and they are expected to earn $0.89 in fiscal 2016). This could lead to a lower P/E multiple which could take the shares back to the low end the valuation range.

• The Purple Chips 12 -18 month valuation range is: low $13.50, high $17.50.

• EXITED INFOSYS AT $16.90 (INFY-US) FULL POSITION

• TOTAL RETURN (including dividends): +11.9%

PURPLE CHIPS TARGET: $17.50 POSITION SIZE: FULL (5.0) P/E: 19.1X DIV: .35 (2.1%) MKT CAP: $38B Cash: $5.2B RETURN ON CAPITAL: 31.6% EARNINGS YIELD: 16.2% 5 YR EPS Growth rate*:10.4% P/E/G Ratio: 1.8 EPS: $0.88 2017 EST.: $0.98 2018 EST.: $1.13

*Blended growth rate= 2/3 historical (5yrs), 1/3 forward.