Wednesday, March 11, 2009

Cash Rich Companies

Argus Research recently provided a list of sixteen cash rich companies with market caps greater the $1 billion.

(click to enlarge)

cash rich companies as of February 27, 2009Additional screeening criteria included:
  • Cash & cash equivalents per share that are at least 25% of the share price.
  • Trailing 12-month cash flow per share of at least $2.00.
  • An estimated long-term growth rate of at least 5%.
  • Total debt that is less 20% or less of capital.
The Argus screen also required trailing 12-month cash flow of at least $2.00 per share and a long-term earnings growth rate of at least 5%. Additionally, they screened out companies that have high or medium-high borrowings. Lastly, the debt of the company was required to be less than 20% of capital.

Just because a company carries a large amount of cash on their balance sheet, it does not mean the company's stock is necessarily a good investment. Additional research needs to be done to ascertain how the company came to acquire high levels of cash. For example, if the cash was simply raised through the sale of a portion of the company's business, future earnings growth may not support current stock price levels.


Argus Update ($)
Argus Research
April 2009

(Disclosure: I have a long interest in Flour and Cisco)

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