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Editorial Advisory Board

  • Professor Andrea M. Armani, University of Southern California
  • Ruti Ben-Shlomi, Ph.D., LightSolver
  • James Butler, Ph.D., Hamamatsu
  • Natalie Fardian-Melamed, Ph.D., Columbia University
  • Justin Sigley, Ph.D., AmeriCOM
  • Professor Birgit Stiller, Max Planck Institute for the Science of Light, and Leibniz University of Hannover
  • Professor Stephen Sweeney, University of Glasgow
  • Mohan Wang, Ph.D., University of Oxford
  • Professor Xuchen Wang, Harbin Engineering University
  • Professor Stefan Witte, Delft University of Technology

3 Cash-Rich Companies That Buy-and-Hold Investors Can Love

cash rich stocks to buy

For the last year, investors have heard the advice that “cash is king.” Cash is also important when it comes to the companies you choose to invest in. And while this is a difficult market, there are still opportunities for buy-and-hold investors with a suitable time horizon. And the three companies in this article are among those opportunities.  

In slowing economies, companies with a strong cash position have more flexibility to handle slowing revenue and/or earnings. And in boom times, a strong cash balance gives these companies the opportunity to make acquisitions and invest in future growth.  

Strong balance sheets make these companies favorites of institutional investors and that means investors can use a dollar cost averaging strategy to buy these stocks at regular intervals without being concerned about stock price movement at a given time.  

A Tech Stock with a Blue-Chip Balance Sheet 

When investors think about cash-rich technology companies, Apple, Inc. (NASDAQ: AAPL) is one of the first to come to mind. But a simple example will illustrate why investors shouldn’t overlook Microsoft  Corporation (NASDAQ: MSFT).  

Microsoft is attempting to buy Activision Blizzard, Inc. (NASDAQ: ATVI) for $70 billion. If the deal makes it through congressional regulators, the company will still have around $60 billion on its balance sheet, which would keep it in the top 10 of companies in terms of cash position.  

The tech giant is also all-in on artificial intelligence with its investment in OpenAI to help develop and scale ChatGPT. And the company is still firmly entrenched in areas like cybersecurity and cloud computing.  

Warren Buffett Likes More Than This Company’s Products 

It’s rumored that Warren Buffett drinks many cans of Coca-Cola every day. While that’s a folksy anecdotal reason to understand the power of a great brand, there’s another reason that Buffett likes the stock of the Coca-Cola Company (NYSE: KO) - cash flow.  

In the case of Coca-Cola, having over $36 billion on its balance sheet gives the company plenty of room to invest in innovative products, globally expand its operations. It also puts the company in position to make acquisitions.  

At 27x earnings, KO stock won’t be considered a value by conventional measures. And although the stock has a Moderate Buy rating, analysts tracked by MarketBeat only give the stock about a 10% upside. But with a strong, growing dividend and a rock-solid balance sheet, the stock is an ideal choice for investors looking for investments that will help them sleep well at night.  

Investing in the “When” Not “If” of Electric Vehicles 

The last of the three cash-rich stocks on this list is the General Motors Company (NYSE: GM). It stands out to me because of the company’s commitment to electric vehicles. The problem is that a transition to EVs cannot be spoken into existence. There’s an infrastructure that needs to be built and a supply chain that is still tangled. That means it may likely be years before the reality of EVs matches the hype. 

Whether you love or hate the idea of electric vehicles, it’s becoming clear that these are car companies. And that means they require a lot of capital. With approximately $38 billion on its balance sheet, General Motors should be in a good position to manage through this transition, no matter how long it takes. Analysts tracked by MarketBeat seem to agree. GM stock has a Moderate Buy rating with a consensus price target that shows 44% upside. 

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