Cash Kings
by John Bajkowski
The Federal Reserve reported that non-financial firms held over $2 trillion in cash on their balance sheets at the end of June, the highest level since 1945. Cash accounted for 7.1% of company assets. Firms are hoarding cash in an environment of economic uncertainty as protection against the type of credit squeeze that occurred in 2008. Adequate cash reserves can help fund research and development, make dividend payments, buy shares back, entice buyout offers, or even acquire other firms. While companies may enjoy the financial freedom of cash, economists fear that a lack of corporate investment and spending may help push the economy into a recession. Since cash earns little return on investment, a critical question to ask is why a company is holding on to its cash.
This issue’s First Cut focuses on firms trading with a high level of net cash per share relative to their share price. Net cash is a traditional measure of excess cash and is calculated by totaling cash, marketable securities and short-term investments and subtracting current liabilities. Beyond high net cash levels, firms making the First Cut have positive earnings and operating cash flow, as well debt levels below the norm for their industry. Financial and utility stocks were excluded because of their unique nature and special cash holding requirements. The 30 stocks with the highest levels of net cash as a percentage of share price made the First Cut. The table also displays the level of net cash relative to total assets. The dividend yield highlights firms paying out some of their cash holdings directly to investors. The listing also includes the price-earnings ratio as a basic valuation measure, the earnings growth rate to examine recent growth, and the 52-week relative price strength to highlight stock market performance relative to other companies. A high net cash level relative to share price or assets does not ensure financial strength or price stability; however, it allows effective managers to fund operations and invest in the
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—John Bajkowski, President of AAII
| Company (Ticker) |
Net Cash per Share ($) |
Net Cash as a % of Price (%) |
Net Cash as a % of Assets (%) |
Total Liab to Assets (%) |
Div Yield (%) |
P/E Ratio (X) |
EPS Growth Rate (3 Yr) (%) |
52-Wk Rel Strgth Rank (%) |
Current Price (Sep 16) ($) |
|
| Description | ||||||||||
| Richardson Electronics, Ltd. (RELL) | 8.14 | 56.1 | 47.1 | 28.6 | 1.4 | 161.1 | 29.9 | 90 | 14.50 | electronic devices |
| American Superconductor (AMSC) | 2.53 | 47.5 | 19.1 | 21.9 | 0.0 | 6.2 | 32.9 | 3 | 5.33 | power grid technologies |
| Rex American Resources (REX) | 7.55 | 46.4 | 19.4 | 32.5 | 0.0 | 33.2 | -42.3 | 75 | 16.26 | alt energy; real estate |
| Park Electrochemical Corp. (PKE) | 11.00 | 44.7 | 62.9 | 8.6 | 1.6 | 17.0 | -2.4 | 41 | 24.60 | printed circuit materials |
| Argan, Inc. (AGX) | 4.49 | 43.1 | 41.7 | 31.3 | 0.0 | 23.7 | 65.3 | 77 | 10.43 | devlp & engin'g for energy |
| STEC, Inc. (STEC) | 3.36 | 34.4 | 43.1 | 11.4 | 0.0 | 9.3 | 72.0 | 24 | 9.76 | solid-state drives |
| MIPS Technologies, Inc. (MIPS) | 1.86 | 32.5 | 80.4 | 13.9 | 0.0 | 16.9 | 71.0 | 20 | 5.73 | processor architectures |
| Rudolph Technologies, Inc. (RTEC) | 2.12 | 30.9 | 28.5 | 14.2 | 0.0 | 6.8 | 29.1 | 32 | 6.87 | process control systems |
| Monolithic Power Systems (MPWR) | 3.91 | 30.9 | 50.3 | 13.7 | 0.0 | 21.1 | 33.2 | 23 | 12.67 | semiconductors |
| Outdoor Channel Holdings (OUTD) | 1.92 | 30.0 | 32.4 | 8.4 | 0.0 | 71.1 | 39.5 | 72 | 6.40 | entertainment & media |
| Lattice Semiconductor (LSCC) | 1.65 | 29.2 | 48.5 | 15.0 | 0.0 | 12.9 | 30.6 | 81 | 5.66 | programmable logic prods |
| GSI Technology, Inc. (GSIT) | 1.46 | 28.5 | 28.2 | 12.8 | 0.0 | 8.5 | 38.7 | 32 | 5.12 | SRAM memory products |
| VAALCO Energy, Inc. (EGY) | 1.66 | 28.4 | 36.7 | 16.0 | 0.0 | 7.6 | 26.6 | 65 | 5.84 | crude oil & natural gas |
| Cabot Microelectronics (CCMP) | 10.51 | 26.8 | 38.7 | 9.4 | 0.0 | 15.9 | 14.5 | 79 | 39.17 | circuit polishing |
| FutureFuel Corp. (FF) | 2.96 | 26.7 | 33.0 | 24.5 | 3.6 | 16.1 | 33.6 | 91 | 11.09 | chemicals & biofuels |
| Electro Scientific Industries (ESIO) | 3.86 | 26.2 | 24.5 | 17.0 | 0.0 | 31.4 | -22.0 | 84 | 14.75 | laser solutions for microtech |
| Data I/O Corporation (DAIO) | 1.37 | 25.4 | 40.5 | 15.1 | 0.0 | 20.8 | 54.2 | 73 | 5.40 | program sys for electron dev |
| Minerals Technologies Inc. (MTX) | 13.21 | 24.6 | 20.4 | 32.6 | 0.4 | 15.3 | 67.2 | 43 | 53.70 | speciality materials |
| JAKKS Pacific, Inc. (JAKK) | 4.87 | 24.6 | 21.4 | 34.6 | 2.0 | 14.4 | -18.1 | 80 | 19.84 | toys, stationery, pet prods |
| Liberty Media Corp. (Starz) (LSTZA) | 17.25 | 23.8 | 32.1 | 16.1 | 0.0 | 18.4 | 183.9 | 71 | 72.52 | entertainment & media |
| Vishay Precision Group Inc. (VPG) | 3.40 | 23.7 | 17.7 | 27.0 | 0.0 | 16.3 | -25.8 | 41 | 14.37 | foil technology prods |
| Bel Fuse, Inc. (BELFA) | 4.21 | 22.8 | 17.4 | 21.6 | 1.3 | 18.6 | -19.1 | 37 | 18.45 | electronic products |
| PetMed Express, Inc. (PETS) | 2.16 | 22.1 | 47.0 | 13.4 | 5.1 | 11.8 | 3.9 | 14 | 9.78 | pet pharmacy |
| OM Group, Inc. (OMG) | 5.89 | 19.6 | 9.7 | 29.6 | 0.0 | 9.0 | -9.8 | 54 | 30.04 | specialty chemicals |
| Kirkland's, Inc. (KIRK) | 1.83 | 18.9 | 18.9 | 36.5 | 0.0 | 10.3 | 43.6 | 23 | 9.70 | home décor retailer |
| Superior Industries Int'l (SUP) | 3.10 | 18.8 | 14.3 | 25.9 | 3.9 | 8.1 | 76.7 | 52 | 16.47 | aluminum wheels |
| True Religion Apparel, Inc. (TRLG) | 5.82 | 18.6 | 45.8 | 14.8 | 0.0 | 17.0 | 14.7 | 91 | 31.24 | brand apparel |
| Volterra Semiconductor (VLTR) | 3.91 | 18.2 | 58.7 | 11.7 | 0.0 | 28.2 | 280.3 | 52 | 21.44 | power mgmt semiconductors |
| Synaptics, Incorporated (SYNA) | 4.57 | 18.1 | 33.8 | 25.5 | 0.0 | 14.1 | 39.0 | 43 | 25.32 | user interface for devices |
| Brooks Automation, Inc. (BRKS) | 1.67 | 18.0 | 17.2 | 18.0 | 3.4 | 4.3 | 8.0 | 92 | 9.29 | instrumentation solutions |
| Source: AAII's Stock Investor Pro, Thomson Reuters and I/B/E/S. Data as of 9/16/2011. | ||||||||||
| Field: | Operator: | Factor: | Compare to: | |
| Exchange | Not Equal | Over the counter | ||
| And | ADR/ADS Stock | Is False | ||
| And | Country | Equals | United States | |
| And | Sector | Not Equal | Financial | |
| And | Sector | Not Equal | Utilities | |
| And | Industry | Not Equal | Real Estate Operations | |
| And | Price | > | 5 | |
| And | Market Cap Q1 | > | 50 | |
| And | EPS-Diluted Continuing 12m | > | 0 | |
| And | EPS-Diluted Continuing Y1 | > | 0 | |
| And | Cash from operations 12m | > | 0 | |
| And | Cash from operations Y1 | > | 0 | |
| And | Total liabilities/assets Q1 | < | Industry Total liabilities/assets Q1 | |
| And | LT debt/total capital Q1 | < | Industry LT debt/total capital Q1 | |
| And | FC: Net Cash to Price | > | 15 | |
| Custom Fields | ||||
| FC: Net Cash per Share | ||||
| ([Cash Q1]+[Short-term investments Q1]-IIF([Current liabilities Q1]<>0,[Current liabilities Q1],[Accounts payable Q1]+[Short-term debt Q1]+[Other current liabilities Q1]))/[Shares Average Q1] | ||||
| FC: Net Cash to Price | ||||
| ([FC: Net Cash per Share] / [Price] ) * 100 | ||||
| FC: Net Cash as % of Assets | ||||
| (([Cash Q1]+[Short-term investments Q1]-IIF([Current liabilities Q1]<>0,[Current liabilities Q1],[Accounts payable Q1]+[Short-term debt Q1]+[Other current liabilities Q1]))/[Total assets Q1])*100 | ||||
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