With global market and economic fears once again rising to the forefront, investors may want to consider cash-rich companies that can weather any storm. Fundamentally, enterprises that carry plenty of green in their pockets should be able to navigate whatever curveballs the gatekeepers of the economy decide to throw. For that, I filtered out stocks based on their market capitalization and cash ratio.
For the former metric, the thought process is fairly logical: the bigger, more established enterprises should prove more resilient under pressure. Regarding the latter, the cash ratio represents a measurement of liquidity. Per Investopedia, it calculates the company’s total cash and cash equivalents line to its current liabilities. In other words, under a theoretical scenario where an enterprise had to pay its debt using cash (or its equivalents) only, the cash ratio gives investors a decent sense of fiscal substance. With that, below are the cash-rich companies to consider.
Texas Instruments (TXN)
One of the major technology giants, Texas Instruments (NASDAQ:TXN) designs and manufactures semiconductors and various integrated circuits, which it sells to electronics designers and manufacturers globally. Since the start of the new year, TXN gained 10% of its equity value. And while it’s down nearly 3% in the trailing year, Texas Instruments improved significantly from 2022’s tech sector implosion.
Moving forward, the global economy faces myriad uncertainties. Fortunately, TXN appears well-prepared for whatever lies ahead. First, the company carries a cash ratio of 3.04 on a trailing-12-month (TTM) basis. As well, it enjoys a robust balance sheet. In particular, the tech giant’s Altman Z-Score pings at 12.83, indicating an extremely low risk of bankruptcy. Also, it’s a highly profitable enterprise. For example, its operating margin comes in at 51.91% while its net margin stands at 43.68%.
Finally, Wall Street analysts peg TXN as a consensus moderate buy. Their average price target is $184.94, implying 3% upside potential. While it might not be wildly exciting, it’s one of the cash-rich companies to consider.
A gold-focused royalty and streaming company, Franco-Nevada (NYSE:FNV) offers an intriguing idea for cash-rich companies. Because of its business structure, Franco-Nevada enjoys greater predictability. It’s not a mining enterprise but rather financially supports miners in exchange for a portion of revenue or metals extracted. It’s also a hefty operation, featuring a market cap of 38 billion CAD (roughly $27.5 billion).
Fundamentally, the fear trade should bolster Franco-Nevada’s precious metals business. As well, the company features a cash ratio of 23.83 times on a TTM basis. Better yet, the enterprise enjoys a stout balance sheet. It features zero debt, affording flexibility for whatever troubles may materialize. Also, its Altman Z-Score comes in at 80.81, indicating practically no chance of bankruptcy within a two-year period.
Also, Franco-Nevada fires on all cylinders operationally. Its three-year revenue growth rate comes in at 16.2% while its net margin is up to 53.21%. Lastly, covering analysts peg FNV as a consensus moderate buy. Their average price target comes out to $153.20, implying 6% upside potential.
Wynn Resorts (WYNN)
Based in Las Vegas, Nevada, Wynn Resorts (NASDAQ:WYNN) is a developer and operator of high-end hotels and casinos. Of course, during the first two years of the Covid-19 crisis, Wynn Resorts and the hospitality industry suffered substantially. However, as social dynamics such as revenge travel took hold, Wynn began putting the pieces back together. Presently, it ranks among the cash-rich companies to consider.
First, Wynn features a cash ratio of 2.02. Second, Wynn may enjoy one of the better forward-looking narratives. In particular, as the global casino gaming environment normalizes – especially in Asia – Wynn could benefit handsomely. To quickly summarize, gamblers in Asia tend to gamble, offering higher revenue-making opportunities. In contrast, western gamblers gravitate toward dining and entertainment, which are less profitable to casinos.
To be fair, the above narrative will require investors to ignore some ugly financial metrics that stemmed from Covid-19. However, the rewards could be robust. Right now, Wall Street analysts peg WYNN as a consensus moderate buy. Their average price target is $114.92, implying nearly 8% upside potential.
Monster Beverage (MNST)
An American beverage company, Monster Beverage (NASDAQ:MNST) specializes in energy drinks. Fundamentally, the company may benefit from the trade-down effect along with social normalization trends. Many companies have begun recalling their workers. However, as mass layoffs show, the economy isn’t holistically robust, meaning that people can’t be frivolous with their money.
From this angle, Monster Beverage could represent a lower-cost alternative to getting coffee at a premium coffee shop or café. Onto the financials, Monster features a cash ratio of 2.66 on a TTM basis. In addition, the company benefits from excellent stability in the balance sheet. Notably, Monster has no debt, thus enjoying tremendous flexibility. Also, its Altman Z-Score comes out to a monstrous 28.77.
Further, the enterprise enjoys strong revenue trends and excellent profitability metrics. As well, its return on equity (ROE) pings at a high of 17.48%. Turning to Wall Street, analysts peg MNST as a consensus strong buy. Their average price target comes out to $113.64, implying over 9% upside potential. Thus, it’s one of the cash-rich companies to consider.
Alphabet (GOOG, GOOGL)
An internet and tech stalwart, Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) routinely attracts attention and controversy. However, in 2022, the Class C GOOG stock suffered uncharacteristically sharp losses. It’s making up for lost time, gaining over 18% since the Jan. opener. However, in the trailing year, it’s down 25%. Still, despite the headwinds, Alphabet remains one of the cash-rich companies.
In terms of raw numbers, Alphabet features a cash ratio of 1.64. Moreover, the tech firm enjoys a stout balance sheet. Notably, its equity-to-asset ratio pings at 0.7 times, above the sector median value of 0.65 times. As well, it features an Altman Z-Score of 9.8, indicating a very low risk of bankruptcy. Operationally, the enterprise continues to delight shareholders. Its three-year revenue growth rate stands at 22.9%, while its net margin dominates the sector at 21.2%.
Looking to the Street, analysts peg GOOG as a unanimous strong buy. Further, their average price target hits $124.88, implying nearly 18% upside potential.
A Chinese multinational technology firm, Baidu (NASDAQ:BIDU) specializes in Internet-related services and products. As well, it dove deeply into artificial intelligence, making Baidu one of the more intriguing tech enterprises. And while it’s off to a massive start to the new year (gaining over 31%), it posted a more modest 7% up in the past 365 days.
To be sure, Baidu may generate some controversy because of the current geopolitical environment. Still, for politics-agnostic investors, Baidu represents one of the cash-rich companies. For starters, its cash ratio comes out to 2.19 on a TTM basis. Second, the company enjoys solid profitability. For example, its net margin is 6%, ranked above 62.48% of the interactive media industry. Also, it’s worth pointing out that the market prices BIDU at a forward multiple of 16.15. As a discount to projected earnings, Baidu ranks better than 63.16% of its peers.
Finally, Wall Street analysts peg BIDU as a consensus strong buy. Moreover, their average price target stands at $184.21, implying nearly 18% upside potential.
Although one of the riskiest names among cash-rich companies, Cameco (NYSE:CCJ) deserves consideration because of its relevant nuclear power business. With geopolitical flashpoints choking off western countries’ access to hydrocarbons, alternative sources of energy will likely take prominence. Nuclear power, despite its controversies, should reach front and center stage (eventually).
For the adventurous investor, CCJ offers an enticing balance. For starters, the company’s cash ratio comes out to 3.64 on a TTM basis. Second, the company enjoys decent (though not great) stability in the balance sheet. Its debt-to-equity ratio is 0.17 times, favorably below the median stat of 0.27 times. Also, the company’s Altman Z-Score is 4.23, indicating low bankruptcy risk within the next two years.
Admittedly, the company’s operational stats come off as rather lackluster or middling. However, as energy needs become more pronounced, CCJ could fly higher. At least, that’s what the analysts think, who pegged CCJ as a unanimous strong buy. Also, their average price target stands at $35.70, implying almost 49% upside potential.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.