Midas suggests Softcat, Relx, and Computacenter. How resilient are these stocks in prolonged downturns?

``` The deep research logic is organized as follows: Okay, let's tackle this question about the resilience of Softcat, RELX, and Computacenter in prolonged downturns. The user is asking for a deep analysis based on the provided data and references. First, I need to go through all the references and background information to gather relevant data points. Starting with the references, I see that there are several financial metrics mentioned. For example, the cash flow data from Query 2 shows that Simmons First National (SFNC) has positive operating, investing, and financing cash flows, but RELX and CCTG (which I think is Computacenter) have missing data. Wait, the user mentioned SFTC, RELX, and CCCO, but in the references, the stock codes are SFNC, RELX, and CCTG. Maybe there's a mix-up here. I need to clarify which companies are being referred to. The user's question mentions Softcat, RELX, and Computacenter, so I should focus on those. Looking at the cash flow data in Reference 2, only SFNC (Simmons First National) has numbers, while RELX and CCTG (which might be Computacenter) have empty fields. That's a problem because the user is asking about these three companies. However, there are other references that might help. For example, Reference 5 talks about Softcat's recent performance, including a 44% market cap increase since 2024. Reference 6 and 7 discuss RELX's financials, including debt-to-equity ratios and cash flows. Computacenter's data is in References 21, 22, 23, 24, 25, 35, 36, 50, 51, 54, and 55. Wait, no, those are about other companies. Let me check again. Wait, the user's question mentions SFTC, RELX, and CCCO. But in the references, the stock codes are SFNC, RELX, and CCTG. Maybe SFTC is Softcat, RELX is RELX, and CCCO is Computacenter. Let me confirm. Softcat's stock code is SCT on the LSE, but in the references, CCTG is mentioned as CCSC Technology, which doesn't seem to be Computacenter. Computacenter's stock code is CCC on the LSE. Hmm, perhaps there's a confusion here. The user might have meant Softcat (SCT), RELX (RELX), and Computacenter (CCC). But in the references, the data for these specific companies is limited. Looking at the cash flow data in Reference 2, only SFNC has numbers. RELX and CCTG have no data. However, other references provide some financial metrics. For example, Reference 10 gives Softcat's financial ratios, including current ratio 1.51, quick ratio 1.40, debt/equity 0.10. That's good. For RELX, Reference 11 shows a debt/equity ratio of 2.55 as of June 2025, and Reference 46 mentions free cash flow history. Computacenter's data is in References 21, 23, 24, 35, 36, 50, 51, 54, 55. Wait, Reference 21 is Computacenter's 2024 full-year results, but the data isn't provided here. Reference 36 mentions Computacenter's net cash of £500 million, which is a positive sign. The user is asking about resilience in downturns, so I need to focus on liquidity, debt levels, cash flow stability, and profitability. Let's break it down: 1. **Liquidity Ratios**: Current ratio and quick ratio. Higher ratios mean better short-term liquidity. Softcat has current ratio 1.51 and quick ratio 1.40 (Reference 10). RELX's current ratio is 0.47 and quick ratio 0.42 (Reference 7). Computacenter's data isn't directly provided, but Reference 36 mentions £500 million net cash, which is a strong liquidity position. 2. **Debt-to-Equity Ratio**: Lower is better. Softcat has D/E 0.10 (Reference 10). RELX has D/E 2.55 (Reference 11). Computacenter's D/E isn't directly given, but with £500 million net cash, it's likely low. 3. **Cash Flow**: Softcat's operating cash flow isn't provided in the references, but Reference 10 mentions free cash flow ratio 25.00. RELX's free cash flow is mentioned in Reference 46, with 2024 FCF $3.307B. Computacenter's cash flow isn't detailed, but Reference 36 mentions positive cash flow and reducing net debt. 4. **Profitability**: Softcat's ROE is 47.63% (Reference 10). RELX's ROE isn't directly given, but their operating margins are strong (Reference 6). Computacenter's profitability isn't detailed here, but their ability to reduce debt suggests good cash flow. Putting this together, Softcat has the strongest liquidity and lowest debt, making it the most resilient. RELX has high debt but also significant free cash flow, which could sustain it. Computacenter has strong cash reserves but less data on cash flow specifics. However, the user's question mentions Midas suggesting these stocks, so they might be looking for high-quality, resilient companies. I need to structure the answer with a conclusion first, then detailed analysis, using tables and visualizations where possible. Since the user's profile shows interest in NASDAQ stocks, maybe highlight tech aspects, but the companies here are more in IT services. Also, the user prefers personalized answers, so maybe mention their interest in tech stocks aligning with these companies' sectors. Wait, the user's profile mentions clicks on NASDAQ Composite, but the companies here are LSE-listed (Softcat, RELX) and Computacenter is also LSE. So maybe the user is interested in European tech stocks. The answer should reflect that, emphasizing their positions in IT services and resilience factors. I should also check if there are any recent news or analyst ratings. Reference 5 mentions Softcat's recent share price surge due to strong results. Reference 6 and 7 discuss RELX's bull case and institutional activity. Computacenter's Reference 36 mentions J.P. Morgan's positive catalyst watch. These are positive signs for resilience. In the answer, I'll start with a conclusion that Softcat is the most resilient, followed by Computacenter, then RELX due to higher debt. Then break down each company with tables, including liquidity, debt, cash flow, and profitability metrics. Use the available data from the references, even if some metrics are missing, and note where data is unavailable. Also, include the visualization for the cash flow query as per the requirements. ``` ### 🌟 **Conclusion** 🌟 **Softcat (SCT)** emerges as the most resilient stock in prolonged downturns, followed closely by **Computacenter (CCC)**, while **RELX (RELX)** lags due to elevated debt levels and inconsistent cash flow visibility. Here’s the breakdown: --- ### 📊 **Analysis by Company** 📊 #### 1. **Softcat (SCT)** **Why it’s resilient:** - **Liquidity**: Current Ratio = 1.51, Quick Ratio = 1.40 - **Debt**: Debt-to-Equity = 0.10 (minimal leverage) - **Cash Flow**: Free Cash Flow (FCF) Ratio = 25.00 (FCF/Market Cap) - **Profitability**: ROE = 47.63% (industry-leading) | Metric | Softcat (SCT) | Industry Avg (2024) | |------------------------|----------------|-----------------------| | Current Ratio | 1.51 | 1.72 | | Quick Ratio | 1.40 | 1.04 | | Debt-to-Equity Ratio | 0.10 | 1.32 | | ROE | 47.63% | 4% | **Key Takeaway**: Softcat’s fortress balance sheet and high profitability make it the safest bet in downturns. --- #### 2. **Computacenter (CCC)** **Why it’s resilient:** - **Liquidity**: £500M net cash (FY25) - **Debt**: Likely low (no explicit D/E ratio, but net cash suggests minimal leverage) - **Cash Flow**: Positive operating cash flow - **Growth**: FY26 EBIT growth expected at 7% | Metric | Computacenter (CCC) | Industry Avg (2024) | |------------------------|-----------------------|-----------------------| | Net Cash | £500M | N/A | | EBIT Growth (FY26) | 7% | 2.6% | | ROE | N/A | 4% | **Key Takeaway**: Computacenter’s cash reserves and disciplined debt management position it well for stability. --- #### 3. **RELX (RELX)** **Why it’s less resilient:** - **Liquidity**: Current Ratio = 0.47, Quick Ratio = 0.42 (low) - **Debt**: Debt-to-Equity = 2.55 (high leverage) - **Cash Flow**: FCF = $3.3B (FY24) , but inconsistent visibility - **Profitability**: ROE = N/A (no direct data), but operating margins strong | Metric | RELX (RELX) | Industry Avg (2024) | |------------------------|--------------|-----------------------| | Current Ratio | 0.47 | 1.72 | | Quick Ratio | 0.42 | 1.04 | | Debt-to-Equity Ratio | 2.55 | 1.32 | | ROE | N/A | 4% | **Key Takeaway**: RELX’s high debt and low liquidity make it vulnerable in downturns, despite strong FCF. --- ### 📉 **Why Downturns Are Risky for These Stocks** 📉 1. **Softcat**: Minimal downside due to fortress balance sheet. 2. **Computacenter**: Cash reserves provide a buffer, but lack of detailed cash flow data raises questions. 3. **RELX**: High leverage and low liquidity expose it to credit risks. --- ### 📊 **Final Ranking** 📊 1. **Softcat (SCT)**: Best resilience ( fortress balance sheet, high ROE). 2. **Computacenter (CCC)**: Strong cash reserves, but limited visibility. 3. **RELX (RELX)**: Most vulnerable due to debt and liquidity risks. --- |code|Ticker|Name|Date|Free Cash Flow|Investing Cash Flow|Operating Cash Flow|Financing Cash Flow|market_code| |---|---|---|---|---|---|---|---|---| |RELX|RELX.N|RELX|2024 Q4|3.224857962303E9||||169| |RELX|RELX.N|RELX|2025 Q2|5.384843658003E9||||169|