“Cash is king,” so the saying goes — and that’s an important saying to keep in mind when you’re hunting down stocks to buy for both outperformance and a safety net.
Apple Inc. (NASDAQ:AAPL) recently announced its second-quarter earnings, and among the morsels of information was the fact the iPhone maker’s cash hoard had grown to $256.8 billion.
Apple, with its vault of riches, has surpassed $800 billion in market capitalization. And the cash on its balance sheet is greater than the market cap of all but 11 S&P 500 companies.
Apple also has $84.5 billion in long-term debt, but even when you back that out, Apple still has more than $170 billion in net cash. When you back that out of AAPL’s market cap, you get a stock that’s trading at just 14 times its trailing 12-month earnings. Not bad at all.
Too much cash can be a problem because the natural instinctive response to this situation is to spend it … often unwisely. But most companies would kill to have Apple’s dilemma.
However, a select few publicly traded companies are in a pretty enviable situation themselves. Specifically, they have oodles of cash like Apple … but none of the debt. That means nothing these companies earn is simply being flushed down the toilet in regular payments. Every dime is either being put into the company, used on dividends and buybacks, lying in wait for a game-changing buyout or just acting as protection for a rainy day.
No matter what way you slice it, these seven stocks to buy are the cream of the crop in large part because of their fantastic fiscal management.