MoneyHeavy
Portfolio
The Chosen Qualities
The stocks that follow have been selected because they represent companies
that have posted strong sales and earnings growth over the past five years.
They have shown no need to borrow money to support operations. They have
more than $300 million in the bank.
These are also companies that are aggressively managing operations and cash
flow. Here's one ratio: subtract cash and marketable securities from current
assets. Then divide that by current liabilities. If it's below 1.0, you have
an aggressive CFO. You have a business that is tightly managing inventories
and receivables, as it holds off payables. That's what I think an investor
in the giants should look for.
Additionally, almost all of these companies sell directly through to the
consumer, and thus have brand values which I believe the investing community
underrates -- sometimes dramatically. Because these companies have a wide
range of buyers, they're protected against the loss of any one or few customers.
Yesterday's Daily Trouble on GALILEO CORP <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: GAEO)") else Response.Write("(Nasdaq: GAEO)") end if %> rather perfectly
showed what happens to even great companies that have few buyers, few sources
for distribution. Lose one or two, and blammo! It may take years to heal
those wounds. When you're running the football downfield against the Chicago
Bears, you want as many strong blockers (buyers) as possible. Billions, if
possible.
So this model is rather simple, and duplicable by anyone with access to an
S&P Stock Guide and Zacks' Analyst Watch. Simply weed out companies without
the $300 million in cash; remove any companies with less than 7% profit margins;
strip away any businesses with more long-term debt than cash; and cast very
skeptical eyes on any businesses with a high current-ratio. You'll want
inventories and accounts receivable as low as possible. Once you add in
consumer-demand element to the equation, you might well end up with a list
that looks something like this:
Microsoft <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: MSFT)") else Response.Write("(Nasdaq: MSFT)") end if %>
Coca-Cola <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: KO)") else Response.Write("(NYSE: KO)") end if %>
Gillette <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: G)") else Response.Write("(NYSE: G)") end if %>
Intel <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: INTC)") else Response.Write("(Nasdaq: INTC)") end if %>
Oxford Health Plans <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: OXHP)") else Response.Write("(Nasdaq: OXHP)") end if %>
Dell Computer <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: DELL)") else Response.Write("(Nasdaq: DELL)") end if %>
Gap <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: GPS)") else Response.Write("(NYSE: GPS)") end if %>
Cisco Systems <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CSCO)") else Response.Write("(Nasdaq: CSCO)") end if %>
Johnson & Johnson <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: JNJ)") else Response.Write("(NYSE: JNJ)") end if %>
Pioneer Hi-Bred International <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: PHB)") else Response.Write("(NYSE: PHB)") end if %>
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