• First Cut
  • Cash Kings

    by John Bajkowski

    Cash Kings Splash image

    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 future of the company.

    —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
      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
    John Bajkowski is president of AAII.


    Discussion

    Guido from NY posted over 5 years ago:

    Cash is king is a good article as far as it goes but it ends after about 2 paragraphs. ---At least I cant find the rest. Please advise.


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