A common mantra of the markets, and life in general for that matter, is that cash is king. The one with the cash is the one who makes the big decisions, and those without are left to save or play the lottery.
Investors always look to make cash, but do they always look at the balance sheet of the companies they invest to see who has the most cash? Doing a quick screen of Cash & Near Cash Securities gives a good list of names you may recognize as the kings of cash. When we take the financials out of the equation, we see a much different picture.
Technology holds a big portion of these cash heavy names, but also notice the other capital intensive industries like automakers and drug stocks.
The question that I have in looking at these numbers is a simple one, with rates at an all-time low and market valuations a little too high for large scale buy backs, where do you think this money will flow?
M&A comes to mind, and we did see Bristol Meyers make a big acquisition recently … but not too many others come to mind.
Where do you expect to see some cash to flow to? Are there any M&A deals you expect to see from these or other industries? Let’s hear your opinion!
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