Cash Machine Trading Cheap – Gartner Stock Set to Run?

We think Gartner (IT) stock is worth a look: It is growing, producing cash, and available at a significant valuation discount. Companies like this can use cash to fuel additional revenue growth, or simply pay their shareholders through dividends or buybacks. Either move makes them attractive to the market.

What Is Happening With IT

IT stock is available at a significant discount to its 3-month, 1-year, and 2-year highs. This can be attributed to decelerated Global Contract Value growth, particularly in the US Federal sector, and 2026 revenue guidance falling below market expectations. Additionally, a decline in free cash flow generation in late 2025 fueled investor concern.

The stock may not reflect it yet, but here is what’s going well for the company: customer engagement is improving with new AI-powered tools like AskGartner showing higher renewal rates. Management anticipates contract value to accelerate throughout 2026, driven by growth in commercial markets. The company maintains a financially sound structure with low debt-to-equity, while strategically divesting non-core assets and successfully issuing investment-grade bonds.

IT Has Strong Fundamentals

• Cash Yield: Gartner offers an impressive cash flow yield of 9.8%.
• Growing: Revenue growth of 3.7% over the last twelve months is not that great, but your cash pile is likely to grow.
• Valuation Discount: IT stock is currently trading at 35% below its 3-month high, 65% below its 1-year high, and 70% below its 2-year high.

Below is a quick comparison of IT fundamentals with S&P medians.

*LTM: Last Twelve Months

But What About The Risk Involved?

While IT stock may be a compelling investment opportunity, it’s always helpful to be aware of a stock’s history of drawdown. Tech stocks took some serious hits in past crashes. During the Dot-Com Bubble, the drop was over 75%. The Global Financial Crisis saw a 70% plunge, and the Covid pandemic dragged prices down nearly 50%. Even the smaller shocks weren’t kind: the 2018 correction knocked about 26%, and the inflation shock sliced around 34%. Strong fundamentals matter, but when the market turns sour, big dips are hard to avoid. But the risk is not limited to major market crashes. Stocks fall even when markets are good – think events like earnings, business updates, and outlook changes. Read IT Dip Buyer Analyses to see how the stock has recovered from sharp dips in the past.

If you want to see more details, read Buy or Sell IT Stock.

Other Stocks Like IT

Not ready to act on IT? You could consider these alternatives:

1. Oracle (ORCL)
2. Carvana (CVNA)
3. Roblox (RBLX)

We chose these stocks using the following criteria:

1. Greater than $2 Bil in market cap
2. Positive revenue growth
3. High free cash flow yield
4. Meaningful discount to 3M, 1Y, and 2Y highs

A portfolio that was built starting 12/31/2016 with stocks that fulfill the criteria above would have performed as follows:

• Average 6-month and 12-month forward returns of 25.7% and 57.9% respectively
• Win rate (percentage of picks returning positive) of >70% for both 6-month and 12-month periods

Portfolios Win When Stock Picks Fall Short

Stocks soar and sink – the key is staying invested. A balanced portfolio helps you ride market volatility, boosts gains and reduces single stock risk.

The Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, has a track record of comfortably outperforming its benchmark that includes all 3 – the S&P 500, S&P mid-cap, and Russell 2000 indices. Why is that? HQ Portfolio has posted more than 105% in cumulative return since inception, with less risk versus the benchmark index, as evident in HQ Portfolio performance metrics.