Worried About Credit Risk? Check Out These 5 Cash-Rich Companies

Managing individual credit scores and risk is frustrating enough, but investors also need to consider the credit risk of a given company when researching stocks. One way to monitor this metric is to look at company balance sheets and examine the size of their cash holdings.

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We ran a screen among US stocks by first looking for those with cash holdings that exceed more than four quarters of average operating expenses. With such large cash cushions, the companies in question could run operations (on average) for more than four quarters without earning any substantial profits.

Then, to find stocks among our results showing upside momentum, we screened for those on "winning streaks."

For our purposes, a winning streak is measured by a persistence of days in which the stock outperformed the S&P 500 and little persistence of days in underperforming the index. We measured this by the ratio of the longest winning streak (in days) divided by the longest losing streak over the last month.

Only five companies met our search criteria. 

The List

Click on the image below to see analyst ratings over time. Average analyst ratings sourced from Zacks Investment Research.

Dig Deeper:  Access a  performance overview  for all stocks in the list

Do the large cash cushions on these companies' balance sheets inspire confidence? Use this list as a starting point for your own analysis.

1. Vical Inc. ( VICL): Engages in the research and development of biopharmaceutical products based on its deoxyribonucleic acid (DNA) delivery technologies for the prevention and treatment of serious or life-threatening diseases. Market cap at $330.09M, most recent closing price at $3.81.

Average quarterly operating expense over the last five quarters at $10.37M, vs. most recent cash and short term investments at $72.38M, implies a Cash / Avg. Operating Expense ratio at 6.98.

The stock's average daily alpha vs. the S&P500 index stands at 1.08% (measured close to close, over the last month). During this period, the longest winning streak lasted 7 days (i.e. the stock's daily returns outperformed the S&P 500 for 7 consecutive days). The longest losing streak lasted 2 days (i.e. a win streak / losing streak ratio of 3.5).

 

2. Immunomedics Inc. ( IMMU): Engages in the research, development, manufacture, and marketing of monoclonal, antibody-based products for the treatment of cancer, autoimmune, and other serious diseases in the United States and Europe. Market cap at $488.73M, most recent closing price at $6.25.

Average quarterly operating expense over the last five quarters at $5.58M, vs. most recent cash and short term investments at $47.8M, implies a Cash / Avg. Operating Expense ratio at 8.57.

The stock's average daily alpha vs. the S&P500 index stands at 1.45% (measured close to close, over the last month). During this period, the longest winning streak lasted 6 days (i.e. the stock's daily returns outperformed the S&P 500 for 6 consecutive days). The longest losing streak lasted 1 day (i.e. a win streak / losing streak ratio of 6.). 

 

3. Geron Corporation ( GERN): Develops biopharmaceuticals for the treatment of cancer and chronic degenerative diseases, including spinal cord injury, heart failure, and diabetes. Market cap at $190.69M, most recent closing price at $1.49.

Average quarterly operating expense over the last five quarters at $17.44M, vs. most recent cash and short term investments at $79.04M, implies a Cash / Avg. Operating Expense ratio at 4.53.

The stock's average daily alpha vs. the S&P500 index stands at 1.4% (measured close to close, over the last month). During this period, the longest winning streak lasted 6 days (i.e. the stock's daily returns outperformed the S&P 500 for 6 consecutive days). The longest losing streak lasted 2 days (i.e. a win streak / losing streak ratio of 3.). 

 

4. Endocyte, Inc. ( ECYT): Engages in developing targeted therapies for the treatment of cancer and inflammatory diseases. Market cap at $604.7M, most recent closing price at $16.83.

Average quarterly operating expense over the last five quarters at $13.85M, vs. most recent cash and short term investments at $134.81M, implies a Cash / Avg. Operating Expense ratio at 9.73.

The stock's average daily alpha vs. the S&P500 index stands at 1.35% (measured close to close, over the last month). During this period, the longest winning streak lasted 5 days (i.e. the stock's daily returns outperformed the S&P 500 for 5 consecutive days). The longest losing streak lasted 2 days (i.e. a win streak / losing streak ratio of 2.5).

 

5. Alnylam Pharmaceuticals, Inc. ( ALNY): Focuses on the discovery, development, and commercialization of novel therapeutics based on RNA interference (RNAi). Market cap at $2.76B, most recent closing price at $46.62.

Average quarterly operating expense over the last five quarters at $44.93M, vs. most recent cash and short term investments at $236.01M, implies a Cash / Avg. Operating Expense ratio at 5.25.

The stock's average daily alpha vs. the S&P500 index stands at 2.52% (measured close to close, over the last month). During this period, the longest winning streak lasted 7 days (i.e. the stock's daily returns outperformed the S&P 500 for 7 consecutive days). The longest losing streak lasted 2 days (i.e. a win streak / losing streak ratio of 3.5). 

 

( List compiled by Emily Smykal, Kapitall Senior Editor. Accounting data sourced from Google Finance. All other data sourced from Finviz.)

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