Risk Aversion: Five S&P 500 Stocks With Healthy Balance Sheets

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(List compiled by Alexander Crawford and Andrew Dominguez. Data sourced from Screener.co. Article by Andrew Dominguez.)

Investors were met with a sobering analysis report Friday morning. According to a team of analysts at Deutsche Bank, the sovereign debt crisis in Europe could spread like a contagion to the rest of world, which may send global stock markets into a 35% slide, reports Alexis Xydias of Bloomberg.

“With markets poised awaiting the results of the European Banking Authority's stress tests on Friday, confidence in policymakers' ability to find a lasting resolution to the ongoing debt issues is dangerously low,” writes Peter Guest of CNBC.

This is coming at the end of a tumultuous week that saw bond yields soar in Italy, Spain, and Ireland, a clear sign that investors doubt the ability of those governments to repay their debts if Greece were to default. As recently as a month ago, the financial sectors of those countries were exposed to billions of dollars of Greek debt.
 
European countries can no longer expect low borrowing costs similar to those of Germany, the strongest Eurozone economy, according to Bank of Italy Governor and incoming European Central Bank President Mario Draghi (via Bloomberg). A Greek default would confirm that Eurozone bonds are not fully protected by the stalwart German economy.

The analysts at Deutsche Bank believe that the sectors in most danger are the financial sector, utilities, industrial, telecoms, and consumer discretionary. Asia, Japan, and Europe, in general, are also in a precarious position (via Business Insider).

Meanwhile, healthcare, consumer staples, and energy are seen as safer sectors. They conclude: “We therefore favour the S&P and companies with healthy balance sheets.” (via The Guardian)

To help you with your own research, we put together a list of S&P 500 companies that show encouraging balance sheet data. In particular, we looked for companies with cash and cash-equivalents greater than total debt in the most recent quarter, and that showed annual current asset growth above 10% (CAGR) and annual current liabilities growth below 5% (CAGR) over the past five years.

Simply, these companies are in a good position to pay off their debts.

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List sorted alphabetically.

1. Corning Incorporated (GLW): Personal and Household Products industry with a market cap of $26B. Current assets grew at an annual rate of 18.08% over the past five years (CAGR) while current liabilities shrank at an annual rate of 3.47% over the same period (CAGR). Cash and cash-equivalents were at $6.30B in the most recent quarter, which was greater than its total debt at $2.27B in the same period.

2. Precision Castparts Corp. (PCP): Misc. Fabricated Products industry with a market cap of $23.09B. Current assets grew at an annual rate of 24.23% over the past five years (CAGR) while current liabilities grew at an annual rate of 4.16% over the same period (CAGR). Cash and cash-equivalents were at $1.16B in the most recent quarter, which was greater than its total debt at $236.60M in the same period.

3. Polo Ralph Lauren Corporation (RL): Apparel/Accessories industry with a market cap of $12.48B. Current assets grew at an annual rate of 12.44% over the past five years (CAGR) while current liabilities shrank at an annual rate of 0.27% over the same period (CAGR). Cash and cash-equivalents were at $1.05B in the most recent quarter, which was greater than its total debt at $291.90M in the same period.

4. Titanium Metals Corporation (TIE): Metal Mining industry with a market cap of $3.29B. Current assets grew at an annual rate of 11.32% over the past five years (CAGR) while current liabilities shrank at an annual rate of 5.95% over the same period (CAGR). Cash and cash-equivalents were at $289.30M in the most recent quarter. It had no debt in the most recent quarter.

5. Waters Corporation (WAT): Scientific and Technical Instruments industry with a market cap of $8.56B. Current assets grew at an annual rate of 11.69% over the past five years (CAGR) while current liabilities shrank at an annual rate of 8.57% over the same period (CAGR). Cash and cash-equivalents were at $1.04B in the most recent quarter, which was greater than its total debt at $790.35M in the same period.



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

Referenced Stocks: GLW , PCP , RL , TIE , WAT

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