5 extremely cash-rich stocks

In a shaky economy, cash is a valuable measure of a company's worth.

By Minyanville.com Aug 6, 2012 3:23PM
Image: Money (© MedioImages/Jupiterimages)Now that earnings season is winding down, we can direct our attention back to the other measures of a company's worth. My favorite is cash -- a lot of cash on hand, so much so that all debts could be wiped out in an instant. Perhaps that is wishful thinking.

To me, cash is actual in-the-bank cash plus short-term liquid investments. Money isn't my only bias. I like to see free cash flow greater than total debt. Plus, I'm very fond of earnings per share (EPS). I like EPS to grow because I see no reason not to have it all.

However, I decided not to penalize stocks that had steady, but not growing, EPS, and have listed them below.

Please note that perfectly good companies have not made this list because of my many biases. But it's interesting that of all the major stocks traded, I could only definitively identify five companies that met my criteria. Two are listed on the New York Stock Exchange, and three are listed on the Nasdaq.

Also note that I primarily used YCharts to screen the stocks. To be safe, I cross-checked the numbers with the Yahoo Finance Stock Screener. In most cases, these numbers were in the same ballpark, give or take a few hundred million. However, in two cases -- Qualcomm (QCOM) and eBay (EBAY) -- the figures were billions of dollars apart. I left them out for now while I'm doing more investigation into this discrepancy. When I looked at the SEC documents, it was not clear how either Yahoo or YCharts came to their otherwise precise (to three decimal points) totals. Clearly I'm missing something.

One thing that became obvious was the peril of relying on a single (or perhaps any) stock screener, which will be addressed in the future.

Here are the five stocks that have the cash and, to all appearances, the wherewithal to spend it wisely. The stock prices are as of approximately 11:45 a.m. ET Monday.

The A Team: Positive EPS Growth

Price: $622.11
Market Cap: $575.53 billion
Cash: $27.65 billion
Long-Term Debt: 0 
Free Cash Flow: $8.133 billion
EPS: $42.55
EPS Growth 19.64%

Google (GOOG)
Price: $647.49
Market Cap: $208.84 billion
Cash: $43.12 billion
Long-Term Debt: $2.987 billion
Free Cash Flow: $3.478 billion
EPS: $33.74
EPS Growth: 9.64%

EMC Corporation (EMC)
Price: $26.76
Market Cap: $56.15 billion
Cash: $5.653 billion
Long-Term Debt: $1.71 billion
Free Cash Flow: $1.058 billion
EPS: $1.21
EPS Growth: 20.83%

The B Team: No EPS Growth

Intel (INTC)
Price: $26.47
Market Cap: $132.72 billion
Cash: $13.65 billion
Long-Term Debt: $7.185 billion
Free Cash Flow: $2.077 billion
EPS: $2.36
EPS Growth: 0%

Microsoft (MSFT)
Price: $29.97
Market Cap: $250.35 billion
Cash: $63.04 billion
Long-Term Debt: $11.94 billion
Free Cash Flow: $7.055 billion
EPS: $2
EPS Growth: 0%

More from Minyanville
Aug 6, 2012 6:02PM
Person who wrote the above article did not bother to include the companies long-term investments as cash.  Every number listed above does not come close to showing those companies true cash positions.  Every company listed above probably has better treasury functions than the banks on Wall Street.

To not include longt-term cash investments (those investments with maturity dates greater than 12 months past the reporting date) with cash and short-term cash investments (investments maturing in less than 12 months) is truly misleading.  

I'm pretty sure that the $90B in long-term investments shown on Apple's balance sheet as of 6-30-12 is tied up in AAA rated paper, US Treasury bonds and other extremely conservative cash-based investments.

In reality, Apple has $117B in cash, MSFT has $73B, EMC $11B, Goog $44B and Intc $17B.  Why any of these firms carry any debt at all is silly.  I'm quite sure the treasury resources needed to manage their debt positions far outweighs the benefits of issue corporate paper.

I wish the articles written on CNBC were a little more accurate.

Aug 6, 2012 4:51PM
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