10 Blue Chips With Cash Cushions for a Crisis

by Jeff Reeves | August 1, 2013 1:08 pm

CashWhen folks are worried about an economic downturn[1], they typically cut back on spending, focus on building up their savings and ensure they have plenty of job security to provide reliable income for their family.

And in corporate America, the mindset is very much the same. That is, businesses focus on trimming the fat from operations to improve efficiency, achieving the most reliable cash flow and a building a big cushion of cash and investments to weather any downturns.

When you look at your portfolio, then, it’s easy to see what businesses are best-prepared for a downturn by focusing on these metrics.

If you’re concerned about a pullback, consider these 10 big-name blue chips that fit that description, with lots of cash in the bank, rich operating cash flow as well as very high revenue-per-employee efficiency.

Here’s the list:

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amgnCash and Investments: $22 billion
Annual Operating Cash Flow: $5.9 billion
Revenue Per Employee: $978,000

Biotech blue chip Amgen (AMGN[3]) is in a great position for stability simply by virtue of its sector of focus.

Healthcare is one of the most recession-proof industries out there, since sickness can strike no matter what the macroeconomic environment. Even in tough times, folks will cut back on everything else before they stop buying medications that keep them healthy and improve the quality of their lives.

But if you need even more reasons to invest in Amgen, take a look at the cash stockpile and the robust cash flow for more peace of mind.

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wellpoint185Cash and Investments: $22.4 billion
Annual Operating Cash Flow: $2.7 billion
Revenue Per Employee: $1.53 million

Another healthcare play that you may not think of as a cash cow is benefits giant Wellpoint (WLP[4]).

The stability of the healthcare business generally coupled with its rock-solid balance sheet and a massive 34 million member base means that this stock is well-equipped to weather any short-term volatility n the stock market.

A 40% gain year-to-date in 2013 is also proof that this pick can deliver good appreciation, too, in addition to its low-risk appeal.

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Exxon Mobil

Exxon Mobil Corp. (NYSE:XOM)Cash and Investments: $41.8 billion
Annual Operating Cash Flow: $56 billion
Revenue Per Employee: $5.38 million

Exxon Mobil (XOM[5]) boasts the largest market cap of any American company at $420 billion … sorry Apple (AAPL[6])!

That kind of scale and reach is impressive enough, and the wide moat that comes with being an integrated oil and gas megacap is also a sure sign that Exxon Mobil will be around for many years to come.

But even if you need more to believe in Exxon’s stability, just consider the efficiency and cash stockpile of this company . You’ll soon see Exxon is one of the most reliable businesses on Wall Street.

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AppleLogo 185Cash and Investments: $146.6 billion
Annual Operating Cash Flow: $50.1 billion
Revenue Per Employee: $2.2 million

People talk a lot about Apple (AAPL[6]) and its struggles, how innovation after the iPhone and iPad has been hard to come by.

And while it’s true that disruption is always a risk in the technology sector, the one big thing Apple has in its favor is that the company has a massive cash stockpile and efficiency that is through the roof.

Sure, there are risks for Apple stock. But it’s cash stockpile is a pretty good safety net.

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Microsoft (NASDAQ:MSFT)Cash and Investments: $87.8 billion
Annual Operating Cash Flow: $31.6 billion
Revenue Per Employee: $828,000

Microsoft (MSFT[7]) may not be the tech giant it once was, particularly after poor earnings lately that included a $900 million writedown[8] related to the unimpressive launch of its Surface tablet line.

But don’t fool yourself into thinking MSFT is going anywhere, post-PC pressures or not. The company has a massive war chest and robust cash flow that will keep it in investors’ good graces no matter what happens in the short-term.

The 2.9% dividend doesn’t hurt, either.

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Chevron Corp. (NYSE:CVX)Cash and Investments: $43.5 billion
Annual Operating Cash Flow: $38.8 billion
Revenue Per Employee: $3.7 million

Chevron (CVX[9]) may not be as big as Exxon (XOM[5]), but it tips the scales at over $240 billion in market cap, so it’s hardly a runt energy stock.

Like Exxon, Chevron enjoys a mammoth cash stock pile and tremendous cash flow annually from its oil operations.

Unless you think that crude oil and gasoline-powered autos are going to vanish tomorrow, I wouldn’t worry about investing in Chevron.

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Cisco NASDAQ:CSCOCash and Investments: $49.6 billion
Annual Operating Cash Flow: $11.5 billion
Revenue Per Employee: $718,000

Cisco (CSCO[10]) is still down significantly from both its dot-com heights and also down from its 2007 peak, but the stock has had a good run in the last 12 months to tack on about 61% to its share price.

And while there is a lot of uncertainty in the enterprise tech space, one thing that is not up for debate is the stability of Cisco. The company has a ton of cash and robust cash flow to keep things moving in the right direction longer term.

A 2.6% dividend and payouts that have tripled since they debuted in 2011 is a nice sweetener, too.

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GoogleCash and Investments: $55.9 billion
Annual Operating Cash Flow: $16.6 billion
Revenue Per Employee: $1 million

Google (GOOG[11]) may have missed earnings[12] a few weeks ago, but this tech giant remains on the cutting edge of consumer technology.

Between its new Chromecast[13] device, Google Glass glasses and Google Fiber Internet connections that are being built out, this company is not at risk of falling behind in the innovation game.

And while advertising remains the lion’s share of profits now, this cash cow continues to throw off big profits despite headwinds in digital display ads. It’s almost impossible to compete with Google when it comes to search and serving ads, and until that changes this stock is essentially bulletproof … even if you don’t take its robust cash hoard into account.

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Pfizer (NYSE:PFE)Cash and Investments: $50.7 billion
Annual Operating Cash Flow: $17.1 billion
Revenue Per Employee: $629,000

Once again, we return to the recession-proof healthcare sector with big pharma heavyweight Pfizer (PFE[14]).

You may fret about patent expirations and generic competition, but the massive war chest at this pharmaceutical company allows it to both research new cures and snap up smaller biotech firms that are developing cures Pfizer will eagerly absorb into its lineup.

The cash cushion is immense and the 3.3% dividend yield is an added incentive for long-term investors who are looking to hunker down in a low-risk play.

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Oracle185Cash and Investments: $32.2 billion
Annual Operating Cash Flow: $14.2 billion
Revenue Per Employee: $309,000

Oracle (ORCL[15]) is another enterprise tech stock that is struggling to find its way amid weak business spending at home and in Europe, and increased competition from cloud-based software companies.

But despite underperformance lately, the stock is still up 50% in the last five years to beat the S&P 500 long-term, and it’s hard to compete with Oracle’s big reach even if smaller players are nibbling at smaller parts of its core businesses.

Plus, with $32.2 billion in the bank, Oracle has plenty of cushion for acquisitions, dividend increases or other big moves to unlock shareholder value in the years ahead.

Jeff Reeves[16] is the editor of InvestorPlace.com and the author of “The Frugal Investor’s Guide to Finding Great Stocks.”[17] Write him at editor@investorplace.com[18] or follow him on Twitter via @JeffReevesIP[19]. As of this writing, he did not own a position in any of the stocks named here.

  1. worried about an economic downturn: https://investorplace.com/2013/07/5-bunker-worthy-dividend-stocks-to-protect-you-from-disaster/
  2. Compare Brokers: https://investorplace.com/options-trading/broker-center/
  3. AMGN: http://studio-5.financialcontent.com/investplace/quote?Symbol=AMGN
  4. WLP: http://studio-5.financialcontent.com/investplace/quote?Symbol=WLP
  5. XOM: http://studio-5.financialcontent.com/investplace/quote?Symbol=XOM
  6. AAPL: http://studio-5.financialcontent.com/investplace/quote?Symbol=AAPL
  7. MSFT: http://studio-5.financialcontent.com/investplace/quote?Symbol=MSFT
  8. a $900 million writedown: http://slant.investorplace.com/2013/07/microsoft-stock-is-not-a-bargain-right-now/
  9. CVX: http://studio-5.financialcontent.com/investplace/quote?Symbol=CVX
  10. CSCO: http://studio-5.financialcontent.com/investplace/quote?Symbol=CSCO
  11. GOOG: http://studio-5.financialcontent.com/investplace/quote?Symbol=GOOG
  12. missed earnings: http://slant.investorplace.com/2013/07/google-earnings-dont-give-up-on-goog-stock/
  13. Chromecast: http://slant.investorplace.com/2013/07/google-chromecast-streaming-video-netflix-pandora/
  14. PFE: http://studio-5.financialcontent.com/investplace/quote?Symbol=PFE
  15. ORCL: http://studio-5.financialcontent.com/investplace/quote?Symbol=ORCL
  16. Jeff Reeves: http://slant.investorplace.com/author/profile/jeff-reeves/
  17. “The Frugal Investor’s Guide to Finding Great Stocks.”: http://www.amazon.com/dp/B007KB9CSI/ref=rdr_kindle_ext_tmb
  18. editor@investorplace.com: mailto:editor@investorplace.com
  19. @JeffReevesIP: http://twitter.com/JeffReevesIP

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