When cash is king

[nioka]

In these times of financial melt down many contributors to ASF are suggesting "go to cash". There is a good way to go to cash, invest in shares and enjoy the best of both worlds.

It is the companies that trade with high debt that are in trouble in the same way that home owners with high mortgages are in trouble. Those of us that own our own home are OK so it is reasonable to assume that companies that "own" their business will do better than those that do not. Some will be affected by the drop in business or the drop in product prices so some will be affected more than others. Even those will be able to manage their business to cope with conditions without financial institution pressure.

Companies with no debt are not as likely to be targeted by hedge funds as those that have debt.

Considering these factors should result in discovering some value stocks on today's market.

So I say "invest in the cashed up companies may be better than have cash sitting around."

 

[prawn_86]

Re: When cash is king.

I think the problem is a lot of stocks are being sold down on panic rather than fundamentals. Therefore it doesnt matter how much cash a stock has, it can still get punished (just not as much as those with high debt).

You know it is pure panic selling when you can find stocks with a cash balance well higher than their market caps....

 

[gfresh]

I think panic selling has stalled on many bluechips.

Anything that doesn't have heavy exposure to the financial markets, and/or relies on predominantly local sales seems to be holding up fairly well.

Woolworths, Fosters, etc spring to mind here. The old safe havens have been punished previously, but are now holding quite strong.

Incredible Charts stockscan feature can work wonders to find say ASX100 stocks that have fallen less than 5%, or are actually are up over the last 3 or 6 months of volatility.

 

[pepperoni]

So who are some large cashed up companies?

 

[nioka]

Re: When cash is king.

I think the problem is a lot of stocks are being sold down on panic rather than fundamentals. Therefore it doesnt matter how much cash a stock has, it can still get punished (just not as much as those with high debt).

You know it is pure panic selling when you can find stocks with a cash balance well higher than their market caps....

That is the reason why there should be some of those cashed up stocks around that are oversold and when reason returns to the market they will be the first to recover.

 

[nioka]

So who are some large cashed up companies?

I haven't had a lot of spare time to research these. I'm hoping for some hints from ASFers. I have bought MCR and CFE as two that I am sure in my own mind that fit the bill. They don't necessarily have to be LARGE companies to be cashed up.

 

[nioka]

Incredible Charts stockscan feature can work wonders to find say ASX100 stocks that have fallen less than 5%, or are actually are up over the last 3 or 6 months of volatility.

I'm looking for those that have fallen 10%+. Those that have fallen well below their value, not those that have held their value