What we’re looking for
Cash-rich companies with no debt – plus a few added measures of safety.
For help, we turned to Jamie Hynes, sales director with S&P Capital IQ, for a screen that combines the hard edge of financial metrics with softer factors, such as analyst opinions and legal issues.
How we did it
Mr. Hynes screened the Capital IQ database for TSX-listed stocks with:
-total cash and short-term investments of at least 10 per cent relative to total assets;
-market capitalization of more than $100-million;
-revenue and free cash flow greater than zero.
To make sure these companies weren’t stockpiling cash because of obvious product challenges or legal problems, Mr. Hynes also added two qualitative factors:
-each firm had to have an average analyst recommendation of “hold” or better (1=buy, 3=hold, 5=sell)
-companies involved in lawsuits or legal issues over the past 12 months were excluded.
More about S&P Capital IQ
S&P Capital IQ offers a comprehensive set of tools for fundamental analysis of global securities as well as idea generation and workflow management.
Its Web- and Excel-based platform provides access to both real-time and historical information on companies, markets, transactions and people around the world.
What we found
Just 19 names pass this demanding screen.
Four failed because of a consensus “sell” rating and another seven were screened out because they were involved in legal matters over the past 12 months.
Research In Motion failed on both measures.
Fifteen of these 19 names have a positive return year-to-date.
(By comparison, the S&P/TSX composite is up 1.2 per cent.)
Three of the four underperforming names are from the materials sector and thus have been hurt by the macroeconomic pressures weighing on resource prices.
As always, you should do your own research before buying any of the names listed here.
Next week we’ll expand our search beyond Canadian borders.
Cash-rich companies with no debt
|Company||Ticker||Mkt. cap. ($ mil.)||Cash (% of total assets)*|
|Exco Technologies Ltd.||XTC-T||203.1||13%|
|Pure Technologies Ltd.||PUR-T||209.2||24%|
|Argonaut Gold Inc.||AR-T||924.1||10%|
|Computer Modelling Group||CMG-T||748.2||75%|
|EGI Financial Holdings Inc.||EFH-T||107.7||17%|
|Enghouse Systems Ltd.||ESL-T||390.3||33%|
|Calian Technologies Ltd.||CTY-T||159.3||31%|
|Descartes Systems Group||DSG-T||530.8||14%|
* Cash = total cash and short-term investments. ** 1=Buy; 3=Hold; 5=Sell. Source: S&P Capital IQ
|Company||Ticker||Mkt. cap. ($ mil.)||Cash (% of total assets)*||Cash* ($ mil.)||Total rev. (T12 mos.; $ mil.)||FCF (T12 mos.; $ mil.)||Avg. broker recom.**||% total rtn. YTD|
|Exco Technologies Ltd.||XTC-T||203.1||13%||22.9||231.9||18.3||1.5||57.3|
|Pure Technologies Ltd.||PUR-T||209.2||24%||28.0||57.7||4.2||1.3||48.4|
|Argonaut Gold Inc.||AR-T||924.1||10%||42.2||166.8||3.0||1.9||42.4|
|Computer Modelling Group||CMG-T||748.2||75%||50.7||65.7||23.7||2.4||33.4|
|EGI Financial Holdings Inc.||EFH-T||107.7||17%||91.0||208.7||41.4||3.0||27.5|
|Enghouse Systems Ltd.||ESL-T||390.3||33%||79.7||129.3||33.7||2.5||26.3|
|Calian Technologies Ltd.||CTY-T||159.3||31%||32.0||235.9||12.5||3.0||24.7|
|Descartes Systems Group||DSG-T||530.8||14%||35.6||118.6||22.5||1.6||15.8|
|Corby Distilleries Ltd.||CDL.A-T||519.0||44%||112.9||138.5||52.8||2.0||15.3|
|Calvalley Petroleum Inc.||CVI.A-T||188.6||41%||90.8||61.9||37.6||2.3||13.0|
|Alamos Gold Inc.||AGI-T||2,257.0||46%||317.1||289.2||75.3||1.9||7.7|
|Silvercorp Metals Inc.||SVM-T||942.6||23%||134.5||193.0||9.1||2.3||(14.6)|
|BMTC Group Inc.||GBT.A-T||688.4||10%||31.0||730.9||6.4||3.0||(22.3)|
|Aurizon Mines Ltd.||ARZ-T||631.8||46%||200.0||253.0||24.4||2.4||(23.2)|
|New Millennium Iron Corp.||NML-T||175.2||40%||77.5||2.3||9.4||2.0||(34.7)|