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:
The perfect place to start creating a foundation to build wealth is with the low-risk stocks that offer a margin of safety. Like companies stuffed with cash, which I'll show you today...
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.
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.
If you don't already own them, start "accumulating" these shares: Establish a foundational position and buy more on pullbacks or as you get additional cash.[mmpazkzone name="in-story" network="9794" site="307044" id="137008" type="4"]
With cash flow of $48 billion a year, Alphabet can cover its debt payments many times over. It threw its hat into the Internet search ring in 1997 - and today still has more than 87% of the search market. That puts it at the strategic epicenter of the World Wide Web - advertising, data mining, artificial intelligence, and more. And at a recent trading price of $1,267 a share, it's down about 17% from its 52-week high of $1,530 a share. It's a great foundational stock.
With 5G coming, we could see a whole new "upgrade cycle" heading our way once this pandemic clears. If you include "treasury securities," you're talking about cash on hand of $207 billion - or about $47 a share (about 20% of its share price). But Apple carries $117 billion in debt, which brings net cash down to $90 billion. At a current trading price of $288, Apple is down about 12% from its 52-week high of nearly $328. It also pays a modest dividend of $3.08 a share - for a yield of 1.1%. It's a Private Briefing favorite, along with our third cash-rich tech play.
The company has also been well-managed financially. It has $134 billion in cash, and $87.1 billion in debt - for net cash of $47 billion. Microsoft shares have fallen to $177, a 7% drop from the 12-month high of $190.70. Like Apple, Microsoft pays a modest dividend - $2.04 a share, for a yield of 1.14%. Incidentally, Private Briefing subscribers have been invested in both Apple and Microsoft since July 2013, meaning our readers are still sitting on gains of 379% and 410%, respectively.
Consider each member of this "low-risk stocks" trio to be "accumulate" plays. If you don't already own them, buy foundational stakes here. And add to your holdings on pullbacks, as you get more cash, or via regularly scheduled investments.
And in the meantime, be sure to check out my colleague Tom Gentile's instant cash opportunity...
You see, Tom just dropped a brand-new way to see INSTANT CASH to the tune of $14,288 in his account, courtesy of Microsoft.
The catch? To start, he didn't buy or short Microsoft. He simply exploited a unique opportunity that exists in the markets right now. See it for yourself right here...
Follow Money Morning on Facebook and Twitter.
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.