7 Cash Rich Stocks Near 52 Week Lows

by: NakedValue

As investors, it doesn't pay to paint all things with a broad brush. While stocks trading near 52 week lows generally imply stock market pessimism, it would be wrong to assume that all stocks near 52 week lows are equally risky.

Here is a list of stocks with large cash balances. We think the strong balance sheets will support the companies and mitigate future headwinds. Investors would be wise to take a closer look at these names.

Cisco Systems (NASDAQ:CSCO)
Stock Price: $16.15
Cash Per Share: $7.89
52 Week Low: $16.07

The networking giant has struggled under the weight of tepid economic growth and increasing competitive pressures. They have long guarded their position at the high end of the market. This is evidenced by their impressive profit margin and one of the most highly regarded franchises in the technology world. Cisco faces some of the most credible competitive pressures in recent memory from Hewlett-Packard (NYSE:HPQ), Juniper Networks (NYSE:JNPR) and Alcatel-Lucent (ALU). But if the company's seemingly rushed attempt to close the chapter on their Flip acquisition was any indication, Cisco is ready to retrench and focus on their core operations.

Cisco trades at a trailing P/E of 12.5, a forward P/E of 9.25 and a PEG ratio of 1.05. Despite generating profit margins of nearly 17%, the company's price/sales is only 2.09. At these levels, and with such a strong financial position, Cisco is certainly worth an additional look.

Hewlett-Packard Co (HPQ)
Stock Price: $36.05
Cash Per Share: $5.93
52 Week Low: $35.44

The integrated computer and technology company is an intriguing stock. It has the name recognition, business diversity and global opportunities that investors want and it trades at cheap valuations. HPQ has a trailing P/E of 8.91, a forward P/E of 6.75 and a PEG ratio of 0.78. Despite a cheap price/sales of 0.61, the company sports a better than expected profit margin of 7.21% and a return on assets of 6.92%.

We previously wrote about Hewlett-Packard's hidden risks, but this is ultimately a risk inherent in all technology companies. Investors should be aware of HPQ's focus on software growth, but this should not define the investment thesis. Going forward, a large investment stake by vocal shareholders could be an important catalyst for shareholder value or at least it could make management think twice before making a potentially expensive acquisition. In addition, despite their desire to grow their software operations, they also have other interesting avenues for upside, including market share opportunities in the networking space. Investors should take note of this stock.

General Motors (NYSE:GM)
Stock Price: $29.28
Cash Per Share: $19.73
52 Week Low: $29.02

The iconic American automaker recently emerged from bankruptcy protection and has become a hedge fund favorite. Shareholders now include: Capital Research Global Investors, Perry Corp, Soros Fund Management, SAC Capital Advisors and Greenlight Capital. The stock has shed or reorganized much of its previous debt obligations and now represents a much different risk profile.

Despite their maligned reputation, GM still controls a sizeable part of the automobile market. In 2010, GM passenger cars and trucks represented 19% of the US market. Their global market share was closer to 11.4%. But this statistic masks the car maker's new global status and growth potential. In 2010, General Motors' vehicle sales were nearly 12.8% of the Chinese market and GM's Chinese vehicle sales matched GM's domestic sales. This is a tremendous testament to the growth in China as GM has sold the same amount of cars there as they have in a domestic market that they have dominated for years.

GM trades at a trailing P/E of 6.98, a forward P/E of 5.90 and a price/book of 1.60.

Computer Sciences Corp (NYSE:CSC)
Stock Price: $38.77
Cash Per Share: $11.87
52 Week Low: $38.55

The Virginia based IT service and outsourcing company reported revenues of $16.128 billion in fiscal year 2010.

After rallying back from nearly $25 to nearly $60 between 2009 and 2010, the stock has fluctuated between $40 and $55. They trade with a trailing P/E of 8.21, a forward P/E of 7.48 and a PEG ratio of 1.19. They have a low price/sales of 0.38 but it is generally in line with their low modest profit margin of 4.61% and return on assets of 4.14%.

Major institutional owners include: Dodge & Cox, Cullen Capital Management and Guggenheim Capital.

Freescale Semiconductors (NYSE:FSL)
Stock Price: $18.25
Cash Per Share: $5.25
52 Week Low: $18.05

The global chip giant was formerly a subsidiary of Motorola (NYSE:MMI). Following a spin-off, the company was bought out by a consortium of private equity firms in 2006 and in May 2011, the company became a public company again.

In 2009, revenues dropped sharply from $5.23 billion in 2008 to $3.5 billion. But since then, revenues have bounced back, generating $4.63 billion in the last twelve months. While prospects are improving, investors should still be cautious of this stock considering the upcoming debt maturities and the still uncertain future cash flows. There are likely better investment opportunities in the technology world.

Lexmark International (NYSE:LXK)
Stock Price: $27.74
Cash Per Share: $16.02
52 Week Low: $27.71

The imaging and printing solutions company is one of the cheapest stocks in the technology industry. It trades with a trailing P/E of 6.82, a forward P/E of 6.71 and a price/book of 1.48. In addition, because of the company's sizeable cash position, the stock trades at an EV/EBITDA of around 2.42.

In early 2007, the stock traded north of $70 before dropping to around $15 during the heights of the financial crisis. Between 2006 and 2010, revenues dropped from $5.1 billion to $4.2 billion. A major reason for this weakness is attributed to the decline in Inkjet printer and subsequent service sales. Between 2008 and 2010, inkjet sales dropped from 6.6 million units to 3.2 million units.

There is reason for additional investor attention. First and foremost, the company is cheap. Second, the company has a strong balance sheet. Finally, despite some declines in inkjet sales, the company earns a majority of their revenues from supplies and services rather than from the actual sales of printers and as such, there should be continued avenues for revenue growth. In addition, their software business rebounded nicely along with the economy, growing 18% in 2010.

Radian Group Inc (NYSE:RDN)
Stock Price: $4.50
Cash Per Share: $44.21
52 Week Low: $4.24

The mortgage insurer has been one of the hardest hit victims of the housing collapse. Like many finance related companies, Radian's cash per share is not a perfect standalone indicator of margin of safety. With the housing market weak across the country, mortgage insurers are likely to remain distressed. The company has exposure to legacy loans but net premiums earned have nearly stabilized in 2010 following a dramatic drop from the 2008 highs.

Radian has a price/book of 0.63 and price/sales of 0.68.

Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in CSCO, HPQ, GM, LXK, CSC over the next 72 hours.

Additional disclosure: I own RDN shares