Stocks have been a little wobbly lately, and as they say, cash is king, especially in a volatile environment. It’s time to look at a couple of stocks that are cash rich, and one which may be a takeout target.
There is no disputing the cash king. It’s Apple Inc.
With more than $60 billion in the bank, Apple could do whatever it wants with the cash. It’s been busy buying up supplies for its popular iPhones, iPads, and iPods, as it can barely keep up with demand.
The stock isn’t expensive either. The stock is trading under 9 times earnings excluding cash, which is incredibly impressive, given its 46% growth rate. Yesterday Credit Suisse put a $500 price target on shares, saying the company could become the world’s first trillion dollar market cap company.
There’s no doubt that the Cupertino, Calif.-based company has a strong executive team, in case something happens to Steve Jobs, and products that consumers and businesses love. What else is there?
The other name is the buyout candidate, Electronic Arts.
The company has $5.90 in cash per share, no debt, and is trading around $18.60 as of the time of this article. If you strip out cash, the company s trading around 13 times 2011 earnings, not expensive at all.
The company is slowly, but surely starting to transition into a social gaming company, and with the rise of Zynga and other social gaming companies, it could be a takeout target. There has also been speculation for ages that a major media company, like Walt Disney or Time Warner would buyout the company.
— Roger Nachman