The 15 Most Cash Rich Companies 70 comments
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In times like these, cash is king, and companies with a lot of it are set to succeed and poised to take advantage. Cash-laden companies are able to scoop up market share and increase revenues with the scarce capital it holds, whether it be through acquisitions or aggressive growth strategies via increased research and investment or updating and increasing production capabilities.
Here are the top 15 companies (along with their quotes, charts, and total cash positions) that have hoarded the most cash, in that order. Financials were excluded for obvious reasons (and that includes GE):
- Exxon Mobil - (XOM), Chart, Total Cash: $32.007 Billion
- Cisco Systems - (CSCO), Chart, Total Cash: $29.531 Billion
- Apple - (AAPL), Chart, Total Cash: $25.647 Billion
- Berkshire Hathaway - (BRK.A), Chart, Total Cash: $25.539 Billion
- Pfizer Inc - (PFE), Chart, Total Cash: $23.731 Billion
- Toyota Motor - (TM), Chart, Total Cash: $23.151 Billion
- Microsoft - (MSFT), Chart, Total Cash: $20.298 Billion
- Google - (GOOG), Chart, Total Cash: $15.846 Billion
- Royal Dutch Shell - (RDS.A), Chart, Total Cash: $15.188 Billion
- Wyeth - (WYE), Chart, Total Cash: $14.54 Billion
- IBM - (IBM), Chart, Total Cash: $12.907 Billion
- Johnson & Johnson - (JNJ), Chart, Total Cash: $12.809 Billion
- Intel - (INTC), Chart, Total Cash: $11.843 Billion
- Hewlett Packard - (HPQ), Chart, Total Cash: $11.255 Billion
- Oracle - (ORCL), Chart, Total Cash: $10.646 Billion
Four of the five companies rated AAA by Standard and Poor’s happen to be on this list. Wonder what that says about cash on the balance sheet….
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This article has 70 comments:
how much is the net cash? having a billion and owing a billion makes the company's amount of cash worth zero.
And Microsoft seems to never climb in value. People just hate Bill Gates and I believe it has a lot to do with off shoring & importing cheaper foreign workers.
Why? Because at the end of it's last quarter, it's Q1 2009, it added another $3.6 billion in cash taking it to a total of $28.1 billion.
And this quarter is going well too, so expect another £2bn+ and you can see why it's not hard to predict.
On Mar 13 10:36 AM TeresaE wrote:
> It wasn't too long ago that GM had $25 billion in cash on their balance
> sheet too.
>
> And Microsoft seems to never climb in value. People just hate Bill
> Gates and I believe it has a lot to do with off shoring & importing
> cheaper foreign workers.
I assumed you were stating these are good stocks to buy, however, if you are not saying these are good companies and one should buy the shares, what are you saying?
On Mar 13 10:36 AM TeresaE wrote:
> It wasn't too long ago that GM had $25 billion in cash on their balance
> sheet too.
>
> And Microsoft seems to never climb in value. People just hate Bill
> Gates and I believe it has a lot to do with off shoring & importing
> cheaper foreign workers.
Microsoft was just listed as #38 on Fortune Magazine's "100 Best Companies To Work For" list. The average hourly worker at Microsoft makes $59,420/year and the average salaried worker makes $112,399/year. The benefits are also outstanding. They do have people in other countries but it is less than the % of their business that comes from non-US sources. If you are talking about H1B people, I would bet money they are paid virtually the same as other US workers. This charge against Microsoft is totally unfounded. I don't believe you know what you are talking about...I have never worked for Microsoft but I do own a little of their stock...
Ticker, debt, net cash
XOM, 9425, 22582
CSCO, 6848, 22683
AAPL, 0, 25647
BRKA, 36882, -11343
PFE, 17283, 7272
TM, 118626, -95745
MSFT, 0, 20298
GOOG, 0, 15846
RDSA, 23269, -8081
WYE, 11739, 2806
IBM, 99925, -21018
JNJ, 11825, 957
INTC, 1988, 9855
HPQ, 20458, -9203
ORCL, 10238, 408
Now things look quite different!
In addition, many companies are burdened with massive pension obligations, the stuff that did GM and Bethlehem Steel in. For example, IBM has 19452 million on its balance sheet; XOM 20729 million.
BRKA also has a maximum of 67 billion derivatives exposure, including 37 billion in equity index puts, 19 billion in CDS, and 18 billion in muni bond insurance.
PFE has just squandered its cash horde on that panic deal with WYE. When the deal closes for good, PFE will have a monstrous debt load and very little cash left.
So if you really like company with lots of cash, AAPL, CSCO, MSFT, GOOG, INTC, and XOM are your best choices.
> how much is the net cash? having a billion and owing a billion makes
> the company's amount of cash worth zero.
Not in this credit market. New debt is still fairly hard to come by.
> By the end of this year I predict Apple will be at the top of this
> list.
>
> Why? Because at the end of it's last quarter, it's Q1 2009, it added
> another $3.6 billion in cash taking it to a total of $28.1 billion.
That and it's collecting cash as if they were about to stop making it.
> If we include debt, things look very differently:
You mean debt and whatever other liabilities you selected to include.
> BRKA also has a maximum of 67 billion derivatives exposure, including
> 37 billion in equity index puts, 19 billion in CDS, and 18 billion
> in muni bond insurance.
And huge liabilities in its other insurance businesses - that's how insurance works. So you've chosen to include some number of these liabilities in "debt" even though they're not debt. How about you include BRK's stock holdings as cash, since they could be cash tomorrow?
Thanks for a great post!
list considering that all that cash has pretty much been spent with their blockbuster purchase
Good thing about it is that right now you won't lose your butt if you hold its shares.
AAPL and GOOG, mountains of cash and no debt... do NOT have AAA ratings.
Go figure.
better off investing in companies that will make more money BECAUSE of the economy being bad rather than hoping todays cash will be still there in the next quarter.
bears on other sites ripped into this pump a few days ago
have a good strategy for deploying their cash. Microsoft is a good example.
It seems to be at a loss as how to use its surplus and has not been able to
make creative use of its bounty.
On the other hand Apple has a huge cash surplus but is deftly utilizing it
and is thereby defining the future of communication and media for decades
into the future.
So an important step is to screen the authors information by determining
which company has the superior management and imagination to not
just "bank" the cash but to intelligently put it to work for future
growth and profit.
On Mar 13 11:38 AM Jon T wrote:
> By the end of this year I predict Apple will be at the top of this
> list.
>
> Why? Because at the end of it's last quarter, it's Q1 2009, it added
> another $3.6 billion in cash taking it to a total of $28.1 billion.
>
>
> And this quarter is going well too, so expect another £2bn+ and you
> can see why it's not hard to predict.
I cannot also speak for Microsoft's particular situation, but H1-B's are grossly underpaid compared with their stateside counterparts. That's typically their main selling point, even though their skills may be generally weaker than their stateside counterparts.
Microsoft for years has been advocating an increase in the H1-B quotas, even at the height of the .com bust.
www.nytimes.com/2009/0...
On Mar 13 12:29 PM Smart1 wrote:
>
On Mar 13 09:30 PM jstratt wrote:
> I like CSCO and IBM best out of the list above. Both have growing
> businesses that compliment their excellent cash position.
>
> Thanks for a great post!
On Mar 14 02:38 AM William Cowie wrote:
> And here's another interesting piece of the puzzle:
>
> AAPL and GOOG, mountains of cash and no debt... do NOT have AAA ratings.
>
>
> Go figure.
>
Only companies with low debt and high cash and which downsize aggressively early on are going to be well positioned for this crash.
With regard to specific stocks:
AAPL garners a majority of revenue from Laptops and Ipods (macworld pie chart www.macworld.com/artic...) -IMHO these sales will evaporate along with other consumer disc. purchases. I think will crash hard. AND without Jobs, even more so.
MSFT, as noted, cash rich for a long time--have really not gotten any traction with new products svcs-dependent on win/office. Some possible good news is that I THINK that companies will prefer to bleed a little w/ new licenses rather than take a large capital investment on low cost solutions (linux/google apps)--cap ex is in training/IT that can handle these jobs
GOOG is VERY interesting 0 debt. Still a bit overpriced, But will continue to innovate (lots of blah blah about innovation in crisis type articles are around), advertising continue to shift to web (more cost effective and goog owns this arena). GOOG is the microsoft of tomorrow.
I think PHARM is much maligned. Think about it people. For all the flak that Obama gets (I'm a liberal), He won't be able to change the system--look what happened under Clinton--A lot of talk, no change. AND Boomers are just now striding into their peak Medication years!!!
BRK is, I think, a Buffet/munger vehicle-old guys whose active investing longevity won't outrun this downcycle.
XOM etc. Great company, probably overvalued. I'd look at historical Oil prices--Even $30/bbl is avg/high in inflation adjusted terms.
INTC-Not sure how their other lines stack up, but i'd guess worldwide chip demand is going to be neg/flat for a while.
CSCO-Not great equipment, but Corps will need to maintain network status quo.
HQP odd chimera of IT. Consumer sales will be neg/flat. I'd think their best days are over
IBM as a friend wrote to me "we're outsourcing everything that's not bolted down" IBM should be able to capitalize on that
TOM-Think consumer capital expenditures will not be great for some time.
So, This is my 2 min Cramer exercise--look at IBM, GOOG, and pharm. I'd also be interested in Consumer Staples that have strong balance sheets/ low debt/equity ratios--Help me people!! Most consumeer staples seem to be too highly leveraged.
On Mar 14 09:33 PM ChipsAhoya wrote:
> Companies generally have to have issued public debt to be rated.
> GOOG doesn't have an AAA rating because they aren't rated at all.
> MSFT actually did issue debt and that's why they have a rating. Apple's
> rating was withdrawn in 2004 and hasn't been updated since because
> there isn't really a need for it to be.
Thanks for the explanation, guys...
In addition, their growth has slowed down significantly. MSFT highly favorable ecosystem were computers costing ~$500-1000. Machines at this price range may justify a $150 OS (plus another $200+ for 'Office software'), but this ecosystem is rapidly shrinking.
Computing devices from iPhones (no Microsoft software at all) to $200 notebooks are quickly becoming "the personal computer market". MSFT can no longer charge $150 per copy of the OS when the whole machine costs $200 or less. They are forced to offer crippled versions of their OS for $50 or less per copy just to remain in the game and even so, there are a few takers. These lower ASPs are ensuring that Microsoft's best days are long gone. Cash, unfortunately will not help a company whose business model has hit a wall.
Please don't get me wrong, MSFT will keep on living for a long long time because many less informed people will keep on buying their software despite much better (including free) alternatives. But I think it is safe to assume that the nice growth and the good old golden-egged goose days are not coming back.
If cash is king, how come the charts show those "full of cash" companies move up last week almost in the same proportion as some with lots of debts and as good as no cash at all, like Harley-Davidson (HOG)stockcharts.com/h-sc/u...
who needed a 600 million$ "bail out" from Buffet and Davis at 15% interest, obliged to cut its dividend by 70%.
The important is not the cash that they have now, but the cash they will still have when the crisis is over.
I am not excessively religious, but this reminds me of something like: "Let the weed and the grain grow together: they will be sorted out when harvest time comes".
The WYE acquisition is another marker on the PFE roadmap since they swallowed Pharmacia in 2002 for 60B. As boomers grow older and world population continues to grow, PFE is en route to capitalize on the masses of humanity.
Cash is not worth cash. Billions of dollars of this so called cash is held in foreign subsidiaries. Because of US tax law, repatriation of that cash would result in MASSIVE tax obligations due to the US Government.
So, when people say Cisco has Billions in cash, it is not as if they can just write a check for that total. They would have to repatriate the cash, pay the tax bill and then have a significantly lower cash balance.
Welcome to the difference between world wide and territorial taxation systems.
The other companies are Infosys, Wipro, etc. A typical gig for them would be to take over the QA department from a US Bank's IT shop.
The reason they send the person here, to work for Wells Fargo for example, is that this person is the "on-site" person, and the goal of the onsite person is to communicate with 5 people who work "offshore". The H1B person learns what the Americans do, and then communicates with the offshore team, allowing the bank to eventually layoff all the Americans, as now they have an army of $20/hr people in India.
Gates simply doesn't understand this, because he actually hires the people to do work for MSFT, not to use them as cheap outsourced labor for corporate clients.
If you want to read more about this, here's a decent description, about half way down the page, www.tinyurl.com/h1bsca...
On Mar 13 12:29 PM Smart1 wrote:
>
On Mar 13 12:14 PM jackooo wrote:
> Why are Gates's charities in Africa? Doesn't the US have the poor
> and down trodden also?
2. Where does all the operating cash flow go? Analysts often quote "free cash flow. If a company is enjoying high levels of free cash flow and not expanding or paying it back to investors as a dividend, be concerned. Also consider the relationship between free cash flow and the equity dividend. If free cash flow does not cover the dividend at least twice, future payouts could be at risk.
3. The final area to look at is the “cash flows from financing activities” section. Just as you would not extend your mortgage to pay for day to day living, a typical bankruptcy candidate will raise long term finance as new debt or equity and then use it to keep trading. So compare the total raised as debt or equity in the “cash flows from financing activities” section and the amount being spent on new assets in the “cash flows from investing activities” above it. A big mismatch with no explanation from directors is another warning signs.
Finding the right kind of cash rich companies are around but just take a little time to find. Finally use the "Altman-Z score" which indicates the probability of a company entering bankruptcy within the next 2 years. The higher the Z score the lower the probability of bankruptcy. An Altman score of 3 indicates bankruptcy is unlikely while a score below 1.8 indicates bankruptcy is possible.
Hope the above helps.
It seems we all need to understand a balance sheet these days and short of becoming forensic accountants at the very least we should try to find answers to the following three questions. Number 1 - Where is the cashing coming from? Companies can boost short term cash flow by borrowing or selling assets. However, there are only so many assets that can be sold and without a regular inflow on cash a company will soon run into trouble. The number to look for is “cash flow from operating activities” – this shows how much cash is generated from the company’s core business activity. A negative number is a red flag and always check back a few years to see if there is any pattern. Highly volatile operating cash flows can suggest trouble – Enron was a classic case in point before it failed.
A firm can also enhance operating cash flows by delaying payments to suppliers just before the financial year end so always take a look at the note that supports the cash flow figure (usually placed a few pages back) and look for the number showing “change in creditors”. If this number has jumped without a corresponding rise in activity – “cost of sales” – in the profit and loss account, be suspicious. It is also worth comparing the firm’s “operating profit” to its “operating cash flow”. Big variations, or an operating profit not matched by a similar amount of operating cash flow are both warning signs.
Number 2: Where does all the operating cash flow go? Analysts often quote “free cash flow” which should be positive and ideally consistent with past years, allowing for changes in activity. For example if sales have decreased 10%, free cash flow will probably have fallen as well and should be in proportion. Companies such as Tesco have been able to expand rapidly by using huge free cash flows to buy freehold sites. However, if a company is enjoying high levels of free cash flow and not expanding or paying it back to investors as a dividend, be concerned. Also consider the relationship between free cash flow and the equity dividend. If free cash flow does not cover the dividend at least twice, future payouts could be at risk.
Number 3: The final area to look at is the “cash flows from financing activities” section. Just as you would not extend your mortgage to pay for day to day living, a typical bankruptcy candidate will raise long term finance as new debt or equity and then use it to keep trading. So compare the total raised as debt or equity in the “cash flows from financing activities” section and the amount being spent on new assets in the “cash flows from investing activities” above it. A big mismatch with no explanation from directors is another warning signs.
In addition look at a company's “Altman-Z score” This indicates the probability of a company entering bankruptcy within the next 2 years. The higher the Z score, the lower the probability of bankruptcy. An Altman score above 3 indicates that bankruptcy is unlikely; a score below 1.8 indicates that bankruptcy is possible.
Finally always look at the directors' dealings - are they buying or selling.
On Mar 15 08:07 AM Did U Think The Ponzi Scheme Would Last? wrote:
> Go look at TM's debt and tell me it is a healthy company in a deflationary
> crash. TM will trade like GM soon. They did not earn their manufacturing
> capacity, they borrowed it from the bank. Debt will get harder and
> harder to come by as auto sales settle in at a fraction of what they
> did over the decade 1995-2005. Toyota is one of the best shorts out
> there because people don't understand how much crushing debt they
> have - over 120 billion worth - as we enter the jaws of the greatest
> economic bust in the history of man.
>
> Only companies with low debt and high cash and which downsize aggressively
> early on are going to be well positioned for this crash.
. To buy such stocks along with other great purchases select the right boker at comparebroker.com
You still need innovation, strong marketing, good timing, and smart people with energy to win.
Still, I would rather have enough cash than not enough.
On Mar 13 10:34 AM BlueOkie wrote:
> Free cash flow per share should be the metric.
On Mar 15 12:33 PM MDLGTO wrote:
> Good starting point. I agree with other posts that cash flow per
> share would be a helpful measure AND that Net Cash/Debt is more important.
>
>
> With regard to specific stocks:
> AAPL garners a majority of revenue from Laptops and Ipods (macworld
> pie chart www.macworld.com/artic...)
> -IMHO these sales will evaporate along with other consumer disc.
> purchases. I think will crash hard. AND without Jobs, even more so.
>
>
> MSFT, as noted, cash rich for a long time--have really not gotten
> any traction with new products svcs-dependent on win/office. Some
> possible good news is that I THINK that companies will prefer to
> bleed a little w/ new licenses rather than take a large capital investment
> on low cost solutions (linux/google apps)--cap ex is in training/IT
> that can handle these jobs
>
> GOOG is VERY interesting 0 debt. Still a bit overpriced, But will
> continue to innovate (lots of blah blah about innovation in crisis
> type articles are around), advertising continue to shift to web (more
> cost effective and goog owns this arena). GOOG is the microsoft of
> tomorrow.
>
> I think PHARM is much maligned. Think about it people. For all the
> flak that Obama gets (I'm a liberal), He won't be able to change
> the system--look what happened under Clinton--A lot of talk, no change.
> AND Boomers are just now striding into their peak Medication years!!!
>
>
> BRK is, I think, a Buffet/munger vehicle-old guys whose active investing
> longevity won't outrun this downcycle.
>
> XOM etc. Great company, probably overvalued. I'd look at historical
> Oil prices--Even $30/bbl is avg/high in inflation adjusted terms.
>
>
> INTC-Not sure how their other lines stack up, but i'd guess worldwide
> chip demand is going to be neg/flat for a while.
>
> CSCO-Not great equipment, but Corps will need to maintain network
> status quo.
>
> HQP odd chimera of IT. Consumer sales will be neg/flat. I'd think
> their best days are over
>
> IBM as a friend wrote to me "we're outsourcing everything that's
> not bolted down" IBM should be able to capitalize on that
>
> TOM-Think consumer capital expenditures will not be great for some
> time.
>
> So, This is my 2 min Cramer exercise--look at IBM, GOOG, and pharm.
> I'd also be interested in Consumer Staples that have strong balance
> sheets/ low debt/equity ratios--Help me people!! Most consumeer staples
> seem to be too highly leveraged.
You make the classic mistake of assuming that all debt is equal but it isn't. Debt on GM's balance sheet is completely different from that at a utility company (like Berkshire's Mid-American which holds 90% of Berkshire's debt. All utilities are funded with debt because of the royalty like stream of their revenues. This makes complete sense as debt funding is a heckuva lot cheaper than equity & the revenue streams are preductable way into the future. Contrast that with tech companies that have to re-invent themselves every 5 years or so or lose their revenue streams - they have to be very careful about using debt & need cash to invest in new ideas or acquire new ideas.
Also it is important to know interest coverage & leverage ratios - net debt in isolation is a pretty useless measurement
On Mar 13 02:35 PM mkreisel wrote:
> If we include debt, things look very differently:
>
> Ticker, debt, net cash
> XOM, 9425, 22582
> CSCO, 6848, 22683
> AAPL, 0, 25647
> BRKA, 36882, -11343
> PFE, 17283, 7272
> TM, 118626, -95745
> MSFT, 0, 20298
> GOOG, 0, 15846
> RDSA, 23269, -8081
> WYE, 11739, 2806
> IBM, 99925, -21018
> JNJ, 11825, 957
> INTC, 1988, 9855
> HPQ, 20458, -9203
> ORCL, 10238, 408
>
> Now things look quite different!
>
> In addition, many companies are burdened with massive pension obligations,
> the stuff that did GM and Bethlehem Steel in. For example, IBM has
> 19452 million on its balance sheet; XOM 20729 million.
>
> BRKA also has a maximum of 67 billion derivatives exposure, including
> 37 billion in equity index puts, 19 billion in CDS, and 18 billion
> in muni bond insurance.
>
> PFE has just squandered its cash horde on that panic deal with WYE.
> When the deal closes for good, PFE will have a monstrous debt load
> and very little cash left.
>
> So if you really like company with lots of cash, AAPL, CSCO, MSFT,
> GOOG, INTC, and XOM are your best choices.
On Mar 13 09:04 AM martyg wrote:
> the author provides the same lack of clarity as do many previous
> commentators on the cash rich companies.
>
> how much is the net cash? having a billion and owing a billion makes
> the company's amount of cash worth zero.
On Mar 13 10:36 AM TeresaE wrote:
> It wasn't too long ago that GM had $25 billion in cash on their balance
> sheet too.
>
> And Microsoft seems to never climb in value. People just hate Bill
> Gates and I believe it has a lot to do with off shoring & importing
> cheaper foreign workers.
On Mar 16 05:13 PM Anna Coulling wrote:
> Finding a cash rich company in which to invest is an important first
> step but trying to establish where the cash is coming from and where
> it is going is even more important. I was given these tips by some
> specialist insolvency accountants (and they should know!).
>
> It seems we all need to understand a balance sheet these days and
> short of becoming forensic accountants at the very least we should
> try to find answers to the following three questions. Number 1
> - Where is the cashing coming from? Companies can boost short term
> cash flow by borrowing or selling assets. However, there are only
> so many assets that can be sold and without a regular inflow on cash
> a company will soon run into trouble. The number to look for is
> “cash flow from operating activities” – this shows how much cash
> is generated from the company’s core business activity. A negative
> number is a red flag and always check back a few years to see if
> there is any pattern. Highly volatile operating cash flows can suggest
> trouble – Enron was a classic case in point before it failed.
>
> A firm can also enhance operating cash flows by delaying payments
> to suppliers just before the financial year end so always take a
> look at the note that supports the cash flow figure (usually placed
> a few pages back) and look for the number showing “change in creditors”.
> If this number has jumped without a corresponding rise in activity
> – “cost of sales” – in the profit and loss account, be suspicious.
> It is also worth comparing the firm’s “operating profit” to its “operating
> cash flow”. Big variations, or an operating profit not matched by
> a similar amount of operating cash flow are both warning signs.<br/>
>
> Number 2: Where does all the operating cash flow go? Analysts often
> quote “free cash flow” which should be positive and ideally consistent
> with past years, allowing for changes in activity. For example if
> sales have decreased 10%, free cash flow will probably have fallen
> as well and should be in proportion. Companies such as Tesco have
> been able to expand rapidly by using huge free cash flows to buy
> freehold sites. However, if a company is enjoying high levels of
> free cash flow and not expanding or paying it back to investors as
> a dividend, be concerned. Also consider the relationship between
> free cash flow and the equity dividend. If free cash flow does not
> cover the dividend at least twice, future payouts could be at risk.
>
>
> Number 3: The final area to look at is the “cash flows from financing
> activities” section. Just as you would not extend your mortgage
> to pay for day to day living, a typical bankruptcy candidate will
> raise long term finance as new debt or equity and then use it to
> keep trading. So compare the total raised as debt or equity in the
> “cash flows from financing activities” section and the amount being
> spent on new assets in the “cash flows from investing activities”
> above it. A big mismatch with no explanation from directors is another
> warning signs.
>
> In addition look at a company's “Altman-Z score” This indicates
> the probability of a company entering bankruptcy within the next
> 2 years. The higher the Z score, the lower the probability of
> bankruptcy. An Altman score above 3 indicates that bankruptcy is
> unlikely; a score below 1.8 indicates that bankruptcy is possible.
>
>
>
> Finally always look at the directors' dealings - are they buying
> or selling.
"Cash is king" until inflation and--dare I say it--hyperinflation sets in. I'd rather see a list of companies with positive net cash flow AND cash on-hand, while comparing that to their short-term and long-term debt.
I've been long on precious metals the last 7 years (bought gold at $250/oz), so what do I know?
On Mar 13 09:04 AM martyg wrote:
> the author provides the same lack of clarity as do many previous
> commentators on the cash rich companies.
>
> how much is the net cash? having a billion and owing a billion makes
> the company's amount of cash worth zero.
On Mar 13 12:14 PM jackooo wrote:
> Why are Gates's charities in Africa? Doesn't the US have the poor
> and down trodden also?
I believe Bill and Melinda Gates also do charity work in Africa because they identified Malaria as a problem where a significant difference could be made, and Africa is where the Malaria problems are.
According to the Gates Foundation:
"In wealthy countries, the war against malaria was won nearly half a century ago.
Malaria then changed from a disease affecting many parts of the world to a disease affecting only poor countries. Efforts to fight malaria in Africa and elsewhere faded from lack of funding, but the disease continued to devastate communities in the developing world.
In 2006, there were 247 million cases of malaria and 881,000 deaths from the disease."
On Mar 13 12:14 PM jackooo wrote:
> Why are Gates's charities in Africa? Doesn't the US have the poor
> and down trodden also?
On Mar 14 02:38 AM William Cowie wrote:
> And here's another interesting piece of the puzzle:
>
> AAPL and GOOG, mountains of cash and no debt... do NOT have AAA ratings.
>
>
> Go figure.
>
On Mar 14 02:38 AM William Cowie wrote:
> And here's another interesting piece of the puzzle:
>
> AAPL and GOOG, mountains of cash and no debt... do NOT have AAA ratings.
>
>
> Go figure.
>
Cash-laden companies are able to scoop up market share and increase revenues with the scarce capital it holds". Good jumping off point for doing more research pre-buy.
On Mar 13 12:19 PM change is the only constant wrote:
> You are correct, in times like this cash is king. It would be more
> valuable if, rather than a lump sum amount given as proof of how
> great a company is, some additional means to determine WHY these
> companies are so good is also provided. Giving a balance sheet figure
> of cash and then saying this is a good company is less thorough than
> say what they could do with this cash for example.
>
> I assumed you were stating these are good stocks to buy, however,
> if you are not saying these are good companies and one should buy
> the shares, what are you saying?
Well done discussion and worth the read.
Jay
I agree about the technology companies and the downside in a shrinking economy. I looove Apple but just can't buy it. Google is the only safe bet of the bunch due to its near-monopoly status in a growing market.
Given the inflationary course clearly being pursued by the Fed, I think it is time or the time is soon to come when cash is no longer king and we need to get everything out of greenbacks and into investments that will maintain their value in an inflationary context.
My main concern right now is finding companies -- in addition to natural resource ETFs and stocks -- whose market value will rise along with inflation and a declining dollar.
These companies should possess wide-moats (near monopolies or with strong competitive positions), easy-to-understand business models, high ROEs, low business risk and low debt (all Buffet/Morningstar critieria).
I have just begun this exercise using Morningstar data by screening Morningstar's wide moat, low business risk, five-star stocks (stocks with a large margin of safety) but have not yet examined cash, debt, debt-to-equity ratios, ROE, etc.
One extremely interesting company is Landstar System (LSTR).
Here is the list of other wide moat companies that I will examine for ROE, cash and debt levels (note there is some overlap):
Procter & Gamble Company PG
3M MMM
Abbott Laboratories ABT
Alcon, Inc. ACL
Boardwalk Pipeline Partners LP BWP
Buckeye Partners, L.P. BPL
Campbell Soup Company CPB
Coca-Cola Company KO
Colgate-Palmolive Company CL
ExxonMobil Corporation XOM
Fastenal Company FAST
International Business Machine IBM
John Wiley & Sons, Inc. JW.A
Johnson & Johnson JNJ
Kinder Morgan Energy Partners, L.P. KMP
Magellan Midstream Partners, L.P. MMP
Medtronic, Inc. MDT
Microsoft Corporation MSFT
McDonald's Corporation MCD
Novartis AG NVS
PepsiCo, Inc. PEP
Comments about these companies very welcome...
On Mar 15 12:33 PM MDLGTO wrote:
> Good starting point. I agree with other posts that cash flow per
> share would be a helpful measure AND that Net Cash/Debt is more important.
>
>
> With regard to specific stocks:
> AAPL garners a majority of revenue from Laptops and Ipods (macworld
> pie chart www.macworld.com/artic...)
> -IMHO these sales will evaporate along with other consumer disc.
> purchases. I think will crash hard. AND without Jobs, even more so.
>
>
> MSFT, as noted, cash rich for a long time--have really not gotten
> any traction with new products svcs-dependent on win/office. Some
> possible good news is that I THINK that companies will prefer to
> bleed a little w/ new licenses rather than take a large capital investment
> on low cost solutions (linux/google apps)--cap ex is in training/IT
> that can handle these jobs
>
> GOOG is VERY interesting 0 debt. Still a bit overpriced, But will
> continue to innovate (lots of blah blah about innovation in crisis
> type articles are around), advertising continue to shift to web (more
> cost effective and goog owns this arena). GOOG is the microsoft of
> tomorrow.
>
> I think PHARM is much maligned. Think about it people. For all the
> flak that Obama gets (I'm a liberal), He won't be able to change
> the system--look what happened under Clinton--A lot of talk, no change.
> AND Boomers are just now striding into their peak Medication years!!!
>
>
> BRK is, I think, a Buffet/munger vehicle-old guys whose active investing
> longevity won't outrun this downcycle.
>
> XOM etc. Great company, probably overvalued. I'd look at historical
> Oil prices--Even $30/bbl is avg/high in inflation adjusted terms.
>
>
> INTC-Not sure how their other lines stack up, but i'd guess worldwide
> chip demand is going to be neg/flat for a while.
>
> CSCO-Not great equipment, but Corps will need to maintain network
> status quo.
>
> HQP odd chimera of IT. Consumer sales will be neg/flat. I'd think
> their best days are over
>
> IBM as a friend wrote to me "we're outsourcing everything that's
> not bolted down" IBM should be able to capitalize on that
>
> TOM-Think consumer capital expenditures will not be great for some
> time.
>
> So, This is my 2 min Cramer exercise--look at IBM, GOOG, and pharm.
> I'd also be interested in Consumer Staples that have strong balance
> sheets/ low debt/equity ratios--Help me people!! Most consumeer staples
> seem to be too highly leveraged.
..unfortunately it's USD
...and a shadow of what the Fed just printed and will "need" to get buy this year and next.
...terrifying actually when you look at it in this perspective.