11 Low Beta Stocks With Large Cash Cushions

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Includes: CREE, DLB, GILD, NGD, NTES, ONXX, QCOM, ROVI, SNDA, WBMD, XLNX
by: Kapitall

If you’re looking for defensive stocks that can withstand market volatility, this list may offer you some interesting ideas.

We performed a screen of stocks with beta below 1, indicating that the stock moves less than 1-for-1 in response to movements of the overall market. Among these stocks, we then searched for those that had high cash holdings relative to their average quarterly operating expense over the last year.

All stocks included below have more than 4 times the cash for their average quarterly operating expense, translating into coverage of more than 1 year of expenses.

Having high cash holdings can buffer the company from lulls in the business cycle, which in turn supports a low beta for the company’s stock.

Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the top six stocks mentioned below. Analyst ratings sourced from Zacks Investment Research.

Do you think these stocks can withstand market volatility? Use this list as a starting-off point for your own analysis.

List sorted by cash holdings divided by average quarterly operating expense.

1. NetEase.com, Inc. (NASDAQ:NTES): Internet Software & Services Industry. Market cap of $5.89B. Beta at 0.95. Current cash holdings at $10.36B vs. average quarterly operating expenses over the last four quarters at $790.22M. Cash/Avg. Quarterly Operating Expense at 13.11, i.e. the company can pay 13.11 quarters worth of average quarterly operating expense without needing to generate revenue. The stock might be undervalued at current levels, with a PEG ratio at 0.82, and P/FCF ratio at 13.8. The stock has gained 49.77% over the last year.

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2. Pharmasset, Inc. (VRUS): Drug Manufacturers Industry. Market cap of $3.79B. Beta at 0.85. Current cash holdings at $208.32M vs. average quarterly operating expenses over the last four quarters at $20.06M. Cash/Avg. Quarterly Operating Expense at 10.39, i.e. the company can pay 10.39 quarters worth of average quarterly operating expense without needing to generate revenue. The stock is a short squeeze candidate, with a short float at 8.26% (equivalent to 5.34 days of average volume). The stock has gained 246.37% over the last year.

3. WebMD Health Corp. (NASDAQ:WBMD): Internet Information Providers Industry. Market cap of $2.82B. Beta at 0.95. Current cash holdings at $1.07B vs. average quarterly operating expenses over the last four quarters at $107.37M. Cash/Avg. Quarterly Operating Expense at 9.92, i.e. the company can pay 9.92 quarters worth of average quarterly operating expense without needing to generate revenue. The stock is a short squeeze candidate, with a short float at 7.25% (equivalent to 5.41 days of average volume).

4. Shanda Interactive Entertainment Ltd. (NASDAQ:SNDA): Multimedia & Graphics Software Industry. Market cap of $2.85B. Beta at 0.8. Current cash holdings at $7.82B vs. average quarterly operating expenses over the last four quarters at $1.18B. Cash/Avg. Quarterly Operating Expense at 6.62, i.e. the company can pay 6.62 quarters worth of average quarterly operating expense without needing to generate revenue. The stock has performed poorly over the last month, losing 13.29%.

5. Dolby Laboratories, Inc. (NYSE:DLB): Diversified Electronics Industry. Market cap of $5.22B. Beta at 0.87. Current cash holdings at $787.09M vs. average quarterly operating expenses over the last four quarters at $132.01M. Cash/Avg. Quarterly Operating Expense at 5.96, i.e. the company can pay 5.96 quarters worth of average quarterly operating expense without needing to generate revenue. The stock has lost 29.24% over the last year.

6. QUALCOMM Incorporated (NASDAQ:QCOM): Communication Equipment Industry. Market cap of $95.75B. Beta at 0.95. Current cash holdings at $13.03B vs. average quarterly operating expenses over the last four quarters at $2.28B. Cash/Avg. Quarterly Operating Expense at 5.70, i.e. the company can pay 5.70 quarters worth of average quarterly operating expense without needing to generate revenue. The stock has gained 63.9% over the last year.

7. Cree Inc. (NASDAQ:CREE): Semiconductor Equipment & Materials Industry. Market cap of $4.77B. Beta at 0.83. Current cash holdings at $1.07B vs. average quarterly operating expenses over the last four quarters at $198.04M. Cash/Avg. Quarterly Operating Expense at 5.42, i.e. the company can pay 5.42 quarters worth of average quarterly operating expense without needing to generate revenue. The stock is a short squeeze candidate, with a short float at 22.68% (equivalent to 6.05 days of average volume).

8. New Gold, Inc. (NYSEMKT:NGD): Nonmetallic Mineral Mining Industry. Market cap of $4.02B. Beta at 0.91. Current cash holdings at $520.17M vs. average quarterly operating expenses over the last four quarters at $103.92M. Cash/Avg. Quarterly Operating Expense at 5.01, i.e. the company can pay 5.01 quarters worth of average quarterly operating expense without needing to generate revenue. The stock has had a couple of great days, gaining 6.59% over the last week.

9. Onyx Pharmaceuticals Inc. (NASDAQ:ONXX): Biotechnology Industry. Market cap of $2.70B. Beta at 0.91. Current cash holdings at $533.39M vs. average quarterly operating expenses over the last four quarters at $107.39M. Cash/Avg. Quarterly Operating Expense at 4.97, i.e. the company can pay 4.97 quarters worth of average quarterly operating expense without needing to generate revenue. The stock is a short squeeze candidate, with a short float at 9.06% (equivalent to 6.94 days of average volume). The stock has had a good month, gaining 14.03%.

10. Rovi Corporation (NASDAQ:ROVI): Multimedia & Graphics Software Industry. Market cap of $6.48B. Beta at 0.92. Current cash holdings at $556.52M vs. average quarterly operating expenses over the last four quarters at $113.56M. Cash/Avg. Quarterly Operating Expense at 4.90, i.e. the company can pay 4.90 quarters worth of average quarterly operating expense without needing to generate revenue. The stock has had a good month, gaining 17.13%.

11. Xilinx Inc. (NASDAQ:XLNX): Semiconductor Industry. Market cap of $9.12B. Beta at 0.93. Current cash holdings at $1.93B vs. average quarterly operating expenses over the last four quarters at $394.99M. Cash/Avg. Quarterly Operating Expense at 4.88, i.e. the company can pay 4.88 quarters worth of average quarterly operating expense without needing to generate revenue. The stock is a short squeeze candidate, with a short float at 9.92% (equivalent to 5.43 days of average volume). The stock has gained 45.93% over the last year.

*Operating expense and cash holdings data sourced from Google Finance, all other data sourced from Finviz. Data collected on the afternoon of Tuesday May 31st.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.