One of the main concerns for investing in high-growth companies is whether they can sufficiently fund new projects as they come along. In this case, large cash holdings can help put potential investors at ease.
Here we present a list of 14 high-growth stocks, with projected EPS growth over the next 5 years above 20%. These stocks also have large cash holdings relative to their average quarterly operating expense over the last year – all stocks listed have more than 4 times the amount of cash for their average quarterly operating expense, translating into coverage of more than 4 quarters of expenses.
Do you think these companies are going to live up to their projected EPS growth rates? Use this list as a starting-off point for your own analysis.
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List sorted by cash/average quarterly operating expense.
1. Molycorp, Inc. (MCP): Industrial Metals & Minerals Industry. Market cap of $4.95B. Projected EPS growth over next five years at 43.00%. Current cash holdings at $492.50M vs. average quarterly operating expenses over the last four quarters at $25.20M. Cash/Avg. Quarterly Operating Expense at 19.55, i.e. the company can pay 19.55 quarters worth of average quarterly operating expense without needing to generate revenue. After a solid performance over the last year, MCP has pulled back during recent sessions. The stock is 15.6% below its SMA20 and 4.92% below its SMA50, but remains 43.4% above its SMA200. The stock has performed poorly over the last month, losing 20.52%.
2. Youku.com Inc (YOKU): Internet Information Providers Industry. Market cap of $4.99B. Projected EPS growth over next five years at 45.00%. Current cash holdings at $1.73B vs. average quarterly operating expenses over the last four quarters at $154.29M. Cash/Avg. Quarterly Operating Expense at 11.18, i.e. the company can pay 11.18 quarters worth of average quarterly operating expense without needing to generate revenue. After a solid performance over the last year, YOKU has pulled back during recent sessions. The stock is 18.28% below its SMA20 and 10.17% below its SMA50, but remains 10.91% above its SMA200. The stock has performed poorly over the last month, losing 21.17%.
3. Baidu, Inc. (BIDU): Internet Information Providers Industry. Market cap of $45.94B. Projected EPS growth over next five years at 56.70%. Current cash holdings at $8.64B vs. average quarterly operating expenses over the last four quarters at $1.11B. Cash/Avg. Quarterly Operating Expense at 7.80, i.e. the company can pay 7.80 quarters worth of average quarterly operating expense without needing to generate revenue. After a solid performance over the last year, BIDU has pulled back during recent sessions. The stock is 8.3% below its SMA20 and 3.83% below its SMA50, but remains 18.71% above its SMA200. The stock has performed poorly over the last month, losing 10.22%.
4. Ctrip.com International Ltd. (CTRP): Consumer Services Industry. Market cap of $6.34B. Projected EPS growth over next five years at 27.25%. Current cash holdings at $3.33B vs. average quarterly operating expenses over the last four quarters at $456.78M. Cash/Avg. Quarterly Operating Expense at 7.30, i.e. the company can pay 7.30 quarters worth of average quarterly operating expense without needing to generate revenue. It's been a rough couple of days for the stock, losing 9.13% over the last week.
5. Acme Packet, Inc. (APKT): Communication Equipment Industry. Market cap of $4.69B. Projected EPS growth over next five years at 23.90%. Current cash holdings at $288.83M vs. average quarterly operating expenses over the last four quarters at $44.88M. Cash/Avg. Quarterly Operating Expense at 6.44, i.e. the company can pay 6.44 quarters worth of average quarterly operating expense without needing to generate revenue. It's been a rough couple of days for the stock, losing 8.17% over the last week.
6. Illumina Inc. (ILMN): Biotechnology Industry. Market cap of $8.95B. Projected EPS growth over next five years at 26.16%. Current cash holdings at $1.13B vs. average quarterly operating expenses over the last four quarters at $187.58M. Cash/Avg. Quarterly Operating Expense at 6.05, i.e. the company can pay 6.05 quarters worth of average quarterly operating expense without needing to generate revenue. The stock has a relatively low correlation to the market (beta = 0.46), which may be appealing to risk-averse investors. The stock is a short squeeze candidate, with a short float at 17.31% (equivalent to 11.22 days of average volume). The stock has gained 75.76% over the last year.
7. United Therapeutics Corp. (UTHR): Drug Manufacturers - Other Industry. Market cap of $3.78B. Projected EPS growth over next five years at 51.64%. Current cash holdings at $683.41M vs. average quarterly operating expenses over the last four quarters at $117.98M. Cash/Avg. Quarterly Operating Expense at 5.79, i.e. the company can pay 5.79 quarters worth of average quarterly operating expense without needing to generate revenue. Risk-averse investors may appreciate that UTHR has a relatively low correlation to the market (beta = 0.6). The stock is a short squeeze candidate, with a short float at 10.22% (equivalent to 9.43 days of average volume).
8. VMware, Inc. (VMW): Technical & System Software Industry. Market cap of $38.07B. Projected EPS growth over next five years at 23.92%. Current cash holdings at $3.66B vs. average quarterly operating expenses over the last four quarters at $647.06M. Cash/Avg. Quarterly Operating Expense at 5.66, i.e. the company can pay 5.66 quarters worth of average quarterly operating expense without needing to generate revenue. The stock has gained 51.82% over the last year.
9. Cree Inc. (CREE): Semiconductor Equipment & Materials Industry. Market cap of $4.30B. Projected EPS growth over next five years at 20.81%. Current cash holdings at $1.07B vs. average quarterly operating expenses over the last four quarters at $198.04M. Cash/Avg. Quarterly Operating Expense at 5.42, i.e. the company can pay 5.42 quarters worth of average quarterly operating expense without needing to generate revenue. The stock is a short squeeze candidate, with a short float at 22.6% (equivalent to 6.3 days of average volume). The stock has lost 45.83% over the last year.
10. New Oriental Education & Technology Group (EDU): Education & Training Services Industry. Market cap of $4.51B. Projected EPS growth over next five years at 26.50%. Current cash holdings at $503.90M vs. average quarterly operating expenses over the last four quarters at $95.64M. Cash/Avg. Quarterly Operating Expense at 5.27, i.e. the company can pay 5.27 quarters worth of average quarterly operating expense without needing to generate revenue. The stock has gained 24.25% over the last year.
11. Nomura Holdings Inc. (NMR): Investment Brokerage - National Industry. Market cap of $18.37B. Projected EPS growth over next five years at 23.10%. Current cash holdings at $1,620.34B vs. average quarterly operating expenses over the last four quarters at $323.06B. Cash/Avg. Quarterly Operating Expense at 5.02, i.e. the company can pay 5.02 quarters worth of average quarterly operating expense without needing to generate revenue. The stock has lost 20.19% over the last year.
12. Rovi Corporation (ROVI): Multimedia & Graphics Software Industry. Market cap of $6.45B. Projected EPS growth over next five years at 20.13%. Current cash holdings at $556.52M vs. average quarterly operating expenses over the last four quarters at $113.56M. Cash/Avg. Quarterly Operating Expense at 4.90, i.e. the company can pay 4.90 quarters worth of average quarterly operating expense without needing to generate revenue. The stock has had a couple of great days, gaining 14.96% over the last week.
13. Intuitive Surgical, Inc. (ISRG): Medical Appliances & Equipment Industry. Market cap of $13.75B. Projected EPS growth over next five years at 20.85%. Current cash holdings at $1.09B vs. average quarterly operating expenses over the last four quarters at $224.65M. Cash/Avg. Quarterly Operating Expense at 4.85, i.e. the company can pay 4.85 quarters worth of average quarterly operating expense without needing to generate revenue. The stock has gained 5.25% over the last year.
14. Red Hat, Inc. (RHT):Application Software Industry. Market cap of $8.72B. Projected EPS growth over next five years at 20.17%. Current cash holdings at $860.60M vs. average quarterly operating expenses over the last four quarters at $190.90M. Cash/Avg. Quarterly Operating Expense at 4.51, i.e. the company can pay 4.51 quarters worth of average quarterly operating expense without needing to generate revenue. The stock has gained 50.42% over the last year.
Cash and avg. quarterly operating expense sourced from Google Finance, all other data sourced from Finviz. Data sourced on May 17th.