Three Good Companies for Next to Nothing

Editor's note: This was originally published on RealMoney. It is being republished as a bonus for TheStreet.com readers.

It's official: The general investing public truly hates the stock market. How else can you explain the absurdity surrounding some valuations today? And no, I am not talking about low price-to-earnings or low price-to-book ratios, although they are fine metrics to lean on.

Instead, I am referring to businesses that have gone beyond low earnings valuations and have gotten to where they trade near net cash on the balance sheet. In other words, the market is giving you the businesses for next to nothing.

When looking today at business that have lots of cash, keep two caveats in mind. First, before getting too excited about cash levels, you have to anticipate how the business will operate in the future. If a business is currently burning through a lot of cash, then the cash on hand today is not as big as it may seem in the context of valuation. In this environment, you want to find companies that look capable of generating enough internal cash from operating activities. ...