Since the recession, persistent uncertainty has caused many U.S. companies to stockpile their cash as a way to prepare against future dips in demand. Apple currently has an astonishing $81.6 billion in cash, although CEO Tim Cook said the cash isn't "burning a hole in our pocket." Google also reported $42.6 billion in cash at the end of the third quarter. What does this mean for investors?
Cash is king
High levels of cash mean that a company is in a safer position to endure future lulls in demand -- a great asset at a time when IMF chief Christine Lagarde is warning of the risk of a global "lost decade" amid a quickly evolving European debt crisis.
High cash also puts companies in a strong position to enter a global recovery, allowing for hefty acquisitions that would otherwise not be possible. A great example is Google's plan announced in August to purchase Motorola Mobility for $12.5 billion, allowing Google to enter the mobility hardware business.
The more volatile markets become, the more comfort investors may find in stocks with large amounts of cash relative to operating expenses.
With that idea in mind, we ran a screen for stocks with the highest amounts of cash relative to their average quarterly operating expenses. We also searched for companies with buying attention from the "smart money" investors: institutional investors and company insiders.
The smart money believes in these cash-comfortable names -- do you? Use this list as a starting point for your own analysis.
List sorted by cash / avg. operating expense. (Click here to access free, interactive tools to analyze these ideas.)
1. Complete Genomics
3. Alimera Sciences
4. Midway Gold
5. Winthrop Realty Trust
Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the stocks mentioned above. Analyst ratings sourced from Zacks Investment Research.
Kapitall's Alexander Crawford does not own any of the shares mentioned above. Accounting data sourced from Google Finance, institutional data sourced from Fidelity, insider data sourced from Yahoo! Finance.
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