aarc

12 Stocks with Lots of Cash

Thanks for the list.

After 18 months of unrelenting sell-off; I was starting to think that SA is the territory for bear huggers rather than those who are looking for alphas.

With cash hoarding, those companies are among the first to be able to capitalize when the economy recovers while those companies with more or less cash but with more credibility will be able to borrow much more cash than those without credibility for business expansion.

Overall, those companies without credibility are the ones that have been crushed so badly during this downturn and will be able to appreciate 10x, 20x or even 50x from their bottoms just by symphatically going with the trend once the trend to the upside resumes. But they are not expected to be able to recover their full price to the top in a very short period of time unlike those companies with high credibility.

For example, GS, JNJ and AMZN have considerable credibility and will be able to recover to their full price or more in less than 5 years once the economic recovery starts. But that will result in 2x to perhaps even 5x price appreciation.

While BHO, FORTY, GSIG, or even cash strapped firms such as SIRI, S, ETFC, PIR among others, if they survive, will require considerable time of perhaps decades before they can recover to full price at their tops, if ever.
Meanwhile, in 5 years time during economic recovery, they can easily make 5x to 10x or a lot more just by reluctantly rallying in sympathy with the general markets. This is because they are basically extremely volatile stocks while at the bottom thus rallies in the order of 10% to 20% or more in a day are quite common while the less volatile stocks such as JnP will be lucky to make 2%.

Those with known history to recover despite severely dibilitating circumstances such as AMR and MSO are the ones I believe will have the capability and ability to recover much faster due to their previous experience.