This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Four Cash-Rich Buyout Candidates

Who's the next buyout candidate?

This is by no means an easy question to answer. Smart Millionaire Zone investors seeking the next ripe apple to fall have a lot to look at, including business fundamentals, market leadership and trophy holdings in a company's asset base.

I like to look at cash. Companies with a lot of free cash -- that is, unencumbered by other business needs -- attract me.

Why? Because the buying company can do anything it wants to with the cash, including financing the acquisition. And because it lowers acquisition risk, free cash is probably the most tangible asset there is.

So how do you find companies with a lot of free cash? Well, it's not so easy, at least for individual investors -- professional screening tools that do it aren't generally available.

While individuals can find cash-rich companies by looking at financial statements, automating the process is pretty tough.

When I looked for a cash screener in commonly available investment portals and broker platforms, I didn't find much. The closest solution came from Fidelity Investments, but you must have an account (although it can be just a retirement account).

Fidelity's screener can search by the "cash to price ratio." Defined as it sounds, this ratio calculates balance-sheet cash per share as a percentage of share value. A cash/price ratio of 0.25, for instance, means that 25% of the share price is covered by cash on hand.

Click here for the video version of this story from Jennifer Openshaw.

1 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
SYM TRADE IT LAST %CHG
COHR $65.14 0.00%
MOH $63.85 0.00%
AAPL $130.28 0.00%
FB $81.53 0.00%
GOOG $565.06 0.00%

Markets

DOW 18,080.14 +21.45 0.12%
S&P 500 2,117.69 +4.76 0.23%
NASDAQ 5,092.0850 +36.0220 0.71%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs