Cash Cushions: List of Companies Backed By Massive Cash Holdings

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(List compiled by Becca Lipman. Data sourced from screener.co and Finviz)

If you had $2 trillion, what would you do with it?

Many people, after gawking at the amount, would respond with the commonly accepted answer: invest. If you were a company, or multiple companies, would you not say the same?

According to Bloomberg, the companies on the Standard & Poor 500 index actually do hold $2 trillion dollars of cash between them, and are doing almost nothing with it.

Normally such large cash holdings translates to dividends, takeovers and heavy investments, but the reality is that companies on the S&P 500 are doing very little of the above.

In fact, their investment and dividend activity is even less than the previous quarters. And since "many corporations report strong first-half profits on top of robust 2010 earnings," Bloomberg poses the question: "shouldn’t shareholders be getting impatient?"

And yes, while not investing money is cause to raise an eyebrow, having large free cash flow can also be an asset to a company.

One measure of making sure a company even has enough cash flow is to compare their cash holdings with their average operating expenses over the last year.

The data translates into the number of quarters the company can survey without generating new revenues (while operating at average expense). Large cash holdings implies a company is better prepared to weather shifts in the market or even a more severe finical storm that would cripple them otherwise.

To help you find the companies hoarding the most cash flow, we created a screen of the S&P 500 stocks and picked out those with the largest amount of cash vs. average operating expenses over the last year (four quarters).

Are these companies hoarding more far cash than they need? See the details below and use it as a starting-off point for your own analysis.

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Data sorted by Cash/Avg Quarterly Operating Expense

1. Fluor Corporation (FLR): Heavy Construction Industry. Market cap of $11.78B. Current price at $66.92. Free Cash Flow for most recent quarter at $292.11M vs. average quarterly operating expenses at $70.34M. Cash/Avg Quarterly Operating Expense at 4.15, i.e the company can go 4.15 quarters without generating revenue and still cover the average operating costs. The stock has had a couple of great days, gaining 5.13% over the last week.

2. Best Buy Co. Inc. (BBY): Electronics Stores Industry. Market cap of $10.96B. Current price at $29.76. Free Cash Flow for most recent quarter at $1.063B vs. average quarterly operating expenses at $49.7M. Cash/Avg Quarterly Operating Expense at 2.14, i.e the company can go 2.14 quarters without generating revenue and still cover the average operating costs. The stock is a short squeeze candidate, with a short float at 14.01% (equivalent to 6. days of average volume). The stock has lost 19.17% over the last year.

3. WellPoint Inc. (WLP): Health Care Plans Industry. Market cap of $27.10B. Current price at $73.56. Free Cash Flow for most recent quarter at $920.2M vs. average quarterly operating expenses at $464.17M. Cash/Avg Quarterly Operating Expense at 1.98, i.e the company can go 1.98 quarters without generating revenue and still cover the average operating costs. The stock has gained 39.74% over the last year.

4. Tesoro Corporation (TSO): Oil & Gas Refining & Marketing Industry. Market cap of $3.62B. Current price at $25.34. Free Cash Flow for most recent quarter at $163M vs. average quarterly operating expenses at $111M. Cash/Avg Quarterly Operating Expense at 1.47, i.e the company can go 1.47 quarters without generating revenue and still cover the average operating costs. Might be undervalued at current levels, with a PEG ratio at 0.77, and P/FCF ratio at 9.72. The stock has had a couple of great days, gaining 8.5% over the last week.

5. CF Industries Holdings, Inc. (CF): Agricultural Chemicals Industry. Market cap of $11.46B. Current price at $159.49. Free Cash Flow for most recent quarter at $609.2M vs. average quarterly operating expenses at $480.47M. Cash/Avg Quarterly Operating Expense at 1.27, i.e the company can go 1.27 quarters without generating revenue and still cover the average operating costs. The stock has had a couple of great days, gaining 5.76% over the last week.

6. AmerisourceBergen Corporation (ABC): Drugs Wholesale Industry. Market cap of $11.05B. Current price at $39.93. Free Cash Flow for most recent quarter at $605.18M vs. average quarterly operating expenses at $478.8M. Cash/Avg Quarterly Operating Expense at 1.26, i.e the company can go 1.26 quarters without generating revenue and still cover the average operating costs. The stock has gained 33.83% over the last year.

7. Viacom, Inc. (VIA-B): CATV Systems Industry. Market cap of $29.67B. Current price at $50.72. Free Cash Flow for most recent quarter at $706M vs. average quarterly operating expenses at $760.25M. Cash/Avg Quarterly Operating Expense at 0.93, i.e the company can go 0.93 quarters without generating revenue and still cover the average operating costs. The stock has gained 53.78% over the last year.

8. Agilent Technologies Inc. (A): Scientific & Technical Instruments Industry. Market cap of $16.15B. Current price at $44.84. Free Cash Flow for most recent quarter at $327M vs. average quarterly operating expenses at $359.5M. Cash/Avg Quarterly Operating Expense at 0.91, i.e the company can go 0.91 quarters without generating revenue and still cover the average operating costs. The stock has gained 56.55% over the last year.

9. Lorillard, Inc. (LO): Cigarettes Industry. Market cap of $15.42B. Current price at $106.39. Free Cash Flow for most recent quarter at $564M vs. average quarterly operating expenses at $625.25M. Cash/Avg Quarterly Operating Expense at 0.90, i.e the company can go 0.90 quarters without generating revenue and still cover the average operating costs. Offers a good dividend, and appears to have good liquidity to back it up--dividend yield at 4.85%, current ratio at 1.66, and quick ratio at 1.5. The stock is a short squeeze candidate, with a short float at 7.31% (equivalent to 5.43 days of average volume). The stock has gained 46.93% over the last year.

10. AutoNation Inc. (AN): Auto Dealerships Industry. Market cap of $5.83B. Current price at $39.97. Free Cash Flow for most recent quarter at $128.80M vs. average quarterly operating expenses at $162.92M. Cash/Avg Quarterly Operating Expense at 0.79, i.e the company can go 0.79 quarters without generating revenue and still cover the average operating costs. The stock is a short squeeze candidate, with a short float at 10.08% (equivalent to 14.26 days of average volume). The stock has had a good month, gaining 13.61%.



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Investing Ideas , Stocks


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