Seems like a double-standard, doesn't it? You're supposed to do everything you can to eliminate your debt, but the companies you invest in keep big loans on their balance sheet.
Let's hope their investments are better than what you've got to show for those five-digit balances on your Visa bill. After all, companies should use corporate debt for expansion opportunities that deliver revenue growth and margin improvement -- as opposed to your "investments," which probably will result in only the latest fashion styles for your kids and maybe a new flat-screen TV for you.
But if your goal is to be debt-free, you might want to consider investing in companies that share that goal by having no long-term debt. Here are five debt-free stocks to consider from various sectors of the market.
Retail: American Eagle Outfitters
Several retailers maintain debt-free balance sheets, including Gymboree, Ann Taylor
Business-software provider SAP
Restaurants: Panera Bread
What happened to Panera Bread
Gaming/entertainment: Electronic Arts
On its surface, Electronic Arts
In today's health-conscious world, we've all probably looked up our latest ailments to better understand our prognosis. WebMD
However, WebMD has maintained high growth rates -- more than 40% in the past four quarters, and 50% in 2006. Still, the forecast for online content providers hasn't been great, so WebMD isn't a slam-dunk investment.
Having no corporate debt doesn't necessarily mean that a company has limited growth opportunities. No debt can be a sign of strong corporate management, or a result of a business with strong cash flow. But just as not all consumer debt is bad, you have to consider debt situations on a case-by-case basis, to determine whether each one is positive or negative for a company's prospects.
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