Wednesday, April 22nd, 2009
Companies with large amounts of cash have a greater ability to withstand the pressures of a recession and are well positioned to expand their businesses through takeovers if such opportunities present themselves. However, we believe that an analysis of a firm’s cash position would be incomplete without also considering their debt burden. As a result, we have conducted a study of firms with large cash on hand and subtracted total liabilities to determine their net cash position.
The list below shows 20 of the largest firms with high net cash.
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Tags: AAPL, ADBE, ADI, BEN, BRCM, buy, CELG, CSCO, FORM, FRX, GOOG, GPRO, hold/sell, HTH, IACI, JNPR, MXIM, net cash, NVR, QCOM, SCMR, sell, strong buy, strong sell, TLAB, YHOO
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Thursday, April 2nd, 2009
Companies with high leverage ratios stand to make good profits in booming economic times, as they can afford to maximize their output to meet budding demand. However, they are more vulnerable during recessions when sales typically slow and can be insufficient to cover interest expenses. During periods of slow or negative revenue growth, massive interest expenses can also lead to volatile earnings results from one quarter to the next, making the stock less popular among investors.
The chart below highlights 4 of the 10 companies we’ve chosen to highlight whose long-term debt/equity ratios have climbed substantially in the last year and are high relative to their historical average.
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Tags: APD, bank lending standards, BNI, CAT, CME, COP, debt/equity ratio, EPD, ETR, HPQ, IBM, MAR, sell
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Tuesday, March 10th, 2009
Hotel construction spending remains much higher than before its boom began, implying the number of hotel rooms available will continue to increase. Meanwhile, rising unemployment suggests vacation and business travel will decline. Thus, increasing room supply coupled with falling demand suggests that hotel room prices will drop further which will hurt profit margins. The example below shows Marriott, whose revenue per available room contracted by more than 6% last year.
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Tags: MAR, revenue per available room, sell
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