Start the conversation
We get scads of questions from you folks here at Money Morning – each and every day.
We get them through our terrific customer-service team members, via Facebook and Twitter, posted as comments on stories, and funneled in through our newsletter gurus (of which I'm one).
But I'll let you all in on a behind-the-scenes secret.
A huge swath of these queries are some variation of the question: "What stocks should I be looking at right now?"
Now, I've been doing this for a very long time.
So I understand that your question is actually much more "nuanced" – much more sophisticated – than that. It's actually three savvy questions wrapped up into one.
And what you're really saying to me – to all of us – is more akin to this…
"Look, Bill, I'm taking the 'long view' here – because I know that's the right way to go. But I want to buy the 'right' stocks."
And by "right stocks," you know you want to buy shares of companies that:
- Have good growth prospects – especially in the post-pandemic world – meaning you'll be able to buy them on the cheap now, and be confident you'll keep making money for years to come.
- Have a business "story" you can understand and explain, since that'll let you keep track of how your investment is doing for that time period.
- Are really "low-risk stocks," meaning there's a "margin of safety" if the stock market and/or the U.S. economy takes it on the chin.
Margin of Safety Net
I firmly believe that our march toward "financial security" or outright "wealth" is a constant one. That's true in good markets or bad. That's true if you're just getting started – or if you're trying to resume that journey after some strategy missteps or a bear-market downdraft.
In other words, there are always moves you can make.
But if you're just getting started – or if you've been wounded financially – you want to be sure to make the "right" moves.
Let's get real here for a moment.
It's not yet clear how tough things could get: Lots of folks remain at risk, the economy is sure to get singed, and that could tip stocks into another free fall.
Companies with good businesses, good brand names, and high levels of cash – net of debt – are sound "safety plays" in any market, but are especially so in one where there's so much uncertainty.
A big cash hoard gives a company plenty of cushion to ride out any tough stretches: It can pay its bills, drop prices to maintain market share, hold the line on its dividend, and cover any negative "surprises."
But a cash hoard can be more than just a safety net.
It can also be a "war chest" – a way to finance opportunities.
All that cash gives a company a way to keep innovating – to keep investing in new product-and-service "inventions." It can be used to buy other companies – especially if those rivals are on the ropes because of a bad economy or a shift in its markets. It can even be used to buy other technologies or other product lines – all of which can accelerate future growth.
Cash Is King
I like cash.
And I love cash-rich companies.
Today I'm giving you several cash-rich plays to choose from – and what I like about each of them.
About the Author
Before he moved into the investment-research business in 2005, William (Bill) Patalon III spent 22 years as an award-winning financial reporter, columnist, and editor. Today he is the Executive Editor and Senior Research Analyst for Money Morning at Money Map Press. With his latest project, Private Briefing, Bill takes you "behind the scenes" of his established investment news website for a closer look at the action. Members get all the expert analysis and exclusive scoops he can't publish... and some of the most valuable picks that turn up in Bill's closed-door sessions with editors and experts.