UBS: Here are 7 cash-rich stocks to buy right now

With stocks on their wildest ride in a while, the volatility may worry some investors into dumping or at least not buying stocks.

UBS, however, thinks now is an opportunity to snap up some potential winners while they’re down.

In a note to clients earlier this week, UBS strategist Julian Emanuel said that companies holding lots of cash on hand are morely likely to weather the diffculties.

“Cash enables canny corporate managers to be convex to volatility, raising the value of that cash, particularly should the Fed begin raising rates,” said Emanuel. “Nowhere is this effect more noticeable than in the Health Care, Technology and Financial sectors, which have hefty warchests.”

For his stock screen, Emanuel applies the “Rule of 15” : companies that have 15% of their assets in cash, whose stock has declined at least 15% since their highest point in 2015 and have a 15% or more upside based on UBS analysts’ price targets. This yielded 22 stocks.

We have compiled the 7 stocks with more than 35% potential upside, and we include the percentages for the other “Rule of 15” categories.

EMC Corp

EMC CEO Joe Tucci

Ticker: EMC

Industry: Information Technology

Price as of Wednesday close: $US24.18

Decline from YTD high: 24.0%

Percentage of assets in cash: 18.1%

Upside to UBS price target: 36.7%

Executive Comments: 'To help ensure we improve our performance, we are going to execute on our growth strategy, reduce our cost base and take additional steps to manage the trends in our traditional storage business. We are implementing significant actions in each company and across the Federation to drive greater operating leverage, additional synergies and increased customer relevance,' said CEO Joe Tucci.

Source: UBS

Intuit Inc.

Owen Thomas, Business Insider

Ticker: INTU

Industry: Information Technology

Price as of Wednesday open: $US83.29

Decline from YTD high: 26.1%

Percentage of assets in cash: 34.2%

Upside to UBS price target: 46.5%

Executive Comments: 'Looking beyond the current period results, we are playing from a position of strength. We're fully committed to winning in the cloud, and we're focusing our attention and investments on assets that accelerate our ability to deliver our two strategic goals, first, to be the operating system behind small business success, and second, to do the nations' taxes,' said CEO Brad Smith.

Source: UBS

Lam Research Corp

Ticker: LRCX

Industry: Information Technology

Price as of Wednesday open: $US70.75

Decline from YTD high: 20.2%

Percentage of assets in cash: 43.5%

Upside to UBS price target: 46.9%

Executive Comments: 'It's important to note that the substance of the outperformance trends that we're demonstrating is based on technology and productivity leadership, strength and execution across the entire organisation, the values and culture of our Company, and the support we have earned from our customers through our focus on customer trust and collaborations aimed at helping them solve their most difficult challenges,' said CEO Martin Anstice.

Source: UBS

Avago Technologies Ltd

Avago Technologies

Ticker: AVGO

Industry: Information Technology

Price as of Wednesday open: $US116.20

Decline from YTD high: 26.7%

Percentage of assets in cash: 15.5%

Upside to UBS price target: 56.7%

Executive Comments: 'Avago has established a strong track record of successfully integrating companies onto its platform. Together withBroadcom, we intend to bring the combined company to a level of profitability consistent with Avago's long-term target model,' said CEO Hock Tan.

Source: UBS

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