Companies that don't have leverage are often said to be stable. When a company doesn't have to worry about meeting interest payments, it can spend more time focusing on the operations of the business. No debt also means that bondholders are no longer in the picture, so the companies will do their best to return capital back to shareholders. The following five companies have no debt.
Bed Bath & Beyond Inc., (NASDAQ:BBBY), together with its subsidiaries, operates a chain of retail stores. It sells a range of domestic merchandise, such as bed linens and related items, bath items, and kitchen textiles.
Bed Bath & Beyond is a well run company. While the company may be a big box retailer, its not feeling the pinch like other big box companies. The company has grown revenue by 20% during the recession and increased margins. The company has $1.5 billion in cash, which equates to $6.45 per share. The stock has a forward P/E of 13.2.
MasterCard Incorporated (NYSE:MA), together with its subsidiaries, provides transaction processing and related services to customers principally in support of their credit, deposit access, electronic cash and automated teller machine payment card programs, and travelers cheque programs.
Mastercard is one of the largest credit card companies in the world. Its cash balance is around $5 billion, which equates to about $39 per share. MasterCard should do well in an economic recovery as consumers spend and pay off their bills. The stock has a forward P/E of 15.3 and pays a 0.3% dividend. With the dividend being so small, it could mean the company has room to grow it. The company has also put billions of dollars in share buybacks.
Activision Blizzard, Inc. (NASDAQ:ATVI) publishes online, personal computer, console, handheld, and mobile games of interactive entertainment worldwide.
Last year, Activision generated nearly $1.3 billion in free cash flow, which is fairly impressive for a gaming developer. The company has $2.9 billion in cash, which equates to about $2.54 per share. The stock has a forward P/E of 11.5 and pays a 1.3% dividend. Activision has some great franchises such as "Call of Duty" and "World of Warcraft," both of which generate strong cash flow.
Intuitive Surgical, Inc. (NASDAQ:ISRG) designs, manufactures, and markets da Vinci surgical systems for various surgical procedures, including urologic, gynecologic, cardiothoracic, general, and head and neck surgeries.
The da Vinci surgical system is one of the most innovative medical technologies we have. The machines are slowly becoming mainstream and Intuitive makes plenty of cash from the maintenance they provide. They have basically generated a razor-razor blade model. The company has $1 billion in cash, which is around $26 per share. The stock has a forward P/E of 29.
Apple Inc., (NASDAQ:AAPL), together with subsidiaries, designs, manufactures, and markets mobile communication and media devices, personal computers, and portable digital music players; and sells related software.
Of course we cannot forget about Apple. Apple prides itself on its cash balance. The company has $97.6 billion in cash and investments. This is more than what any other company in the world holds. The amount of share is equal to $104 per share. With a balance this huge, the company could pay a large dividend or buyback shares. Its still unknown what Apple plans to do with the cash, but the company will eventually use it. The stock has a forward P/E of 10.4.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.