Five Cash-Rich Companies Worth a Look

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 |  Includes: FMCN, HNR, NCTY, NSP, RAIL
by: Ryan Edward

Having cash on the balance sheet is one of the attributes of an attractive investment opportunity in today's environment. Not only does it provide a safety net for the company to fall back on in hard times, but the best defense is usually the best offense. Having cash on hand allows a company to make strategic acquisitions during tough times, on the cheap.

It's often the case that companies trading near cash value are expected to turn a loss during the near future. Not only does that provide a good buying opportunity for the long-term investor, but the stocks listed below are actually expected to turn a positive EPS over the next 12 months.

The following is a list of five stocks that have about half of their market cap in cash. Additionally, many have zero long-term debt:

Company Symbol Market Cap Recent Price Cash/Share Price/Cash Ratio
The9 Limited NCTY $376 million $13.75 $7.54 1.82
Focus Media FMCN $987 million $6.63 $2.90 2.29
Harvest Natural HNR $145 million $3.48 $3.59 0.97
FreightCar America RAIL $174 million $18.16 $10.93 1.66
Administaff ASF $478 million $22.37 $10.04 2.23
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The9 Limited (NASDAQ:NCTY)

The9 Limited is an online game operator and developer in China. The9 Ltd. has a market cap of $376 million; its shares were traded at around $13.75 with a P/E ratio of 7.1 and P/S ratio of 1.4. The dividend yield of The9 Ltd. stocks is 15.8%.

Focus Media (NASDAQ:FMCN)

Focus Media operates the largest out-of-home advertising network in China using audiovisual plat-panel displays based on the number of locations and number of displays in its network. Focus Media Holding Ltd. has a market cap of $987 million; its shares were traded at around $6.63 with a P/E ratio of 4.7 and P/S ratio of 2.3.

Harvest Natural (NYSE:HNR)

Harvest Natural Resources Inc. is an independent oil and gas exploration and development company with principal operations in Venezuela and Russia. Harvest Natural Resources Inc. has a market cap of $145 million; its shares were traded at around $3.48 with a P/E ratio of 17.5 and P/S ratio of 10.2

FreightCar America (NASDAQ:RAIL)

FreightCar America Inc. manufactures railroad freight cars with particular expertise in coal-carrying railcars. In addition to coal cars, FreightCar America designs and builds flat cars, mill gondola cars, intermodal cars, coil steel cars, and motor vehicle carriers. FreightCar America Inc. has a market cap of $174 million; its shares were traded at around $18.16 with a P/E ratio of 11.7 and P/S ratio of 0.3. The dividend yield of FreightCar America Inc. stocks is 1.4%.

Administaff (ASF)

Administaff is a personnel management company that serves as a full-service human resources department for small and medium-sized businesses throughout the United States. Administaff Inc. has a market cap of $478 million; its shares were traded at around $22.37 with a P/E ratio of 12.4 and P/S ratio of 0.3. The dividend yield of Administaff Inc. stocks is 2.3%. Administaff Inc. had an annual average earning growth of 21.2% over the past 10 years.

Although many stocks have been knocked down near cash value for a reason, these companies have strong businesses and should turn a profit in 2009. As Ben Graham suggested, holding a basket of stocks such as these could help your portfolio achieve long-term success.

Disclosure: None