Wednesday, April 9, 2008

"cash is king" companies worth considering

these are balance sheet bargains. these cash-rich, debt-poor companies, operating mainly in the tech sector, have the potential to deliver outsized returns.

acti - provides digital identity assurance solutions for the enterprise, government, healthcare and financial service markets worldwide. the company provides software and hardware products that enable organizations to issue, manage and use trusted digital identities for secure physical and logical access, secure communications and legally binding digital transactions. the balance sheet sports $2.65 per share in cash and burn rate has slowed considerably.

cogt is a provider of automated fingerprint identification systems (AFIS) and other fingerprint biometrics solutions to governments, law enforcement agencies and other organizations worldwide. its afis solutions enable customers to capture fingerprint images electronically, encode fingerprints into searchable files and compare a set of fingerprints to a database of potentially millions of fingerprints in seconds. the company is profitable and the balance sheet contains nearly $5 per share in cash.

cspi develops and markets information technology integration solutions and high-performance cluster computer systems to meet the requirements of its industrial, commercial, scientific and defense customers worldwide. these include manufactured hardware products used in an array of applications, including radar, sonar and surveillance signal processing. the stock trades for just 8.5 times notoriously volatile earnings and 25% of sales while cash of $5.29 per share represents nearly all of the current share price.

cybe is a global supplier of optical process control sensors and inspection systems that are used to control the manufacturing process and to ensure the quality of electronic circuit boards manufactured by its customers using surface mount technology (SMT). it also manufactures and sells sensors that assist with yield improvement and the placement and transport of wafers during semiconductor fabrication. the company has $3.50 per share in ‘Current’ cash and equivalents and $2.40 per share in ‘Long-Term’ marketable securities and the bottom line is solidly in the black.

dram is a developer, manufacturer and marketer of large-capacity memory products primarily used in high-performance network servers and workstations. it provides customized memory solutions for original equipment manufacturers (OEMs) and compatible memory for computers manufactured by Sun, HP, IBM, Silicon Graphics and Dell. earnings are highly volatile, but the price to sales ratio is 0.80, there is $2.05 per share in cash on the balance sheet and the stock yields 8%.

ditc is a global telecommunications equipment supplier for mobile and wireline operator communication networks. though the company is profitability challenged, ditc trades only 5% above the $2.79 per share in cash on the company’s balance sheet. in addition, ditc currently has no debt and is only trading at 50% of tangible book value.

efii is a market leader in print technology, providing color digital print controllers, super-wide format printers and inks, and print management solutions. the balance sheet has no long-term debt and $9.09 per share of net cash. shares of efii are trading at 14.5 times 2008 earnings forecasts, as reported by reuters.

ivac is a provider of disk sputtering equipment to manufacturers of magnetic media used in hard disk drives. the company also develops and provides technology for low-light imaging sensors, cameras and systems, and management (which comes from Applied Materials) has just entered the chip equipment biz. forward-looking earnings will weaken, but the company has been very profitable and there is more than $6 per share in cash on the balance sheet.

nte is an electronics manufacturing and design services provider to a select group of original equipment manufacturers of telecommunications and consumer electronic products. nte manufactures electronic components and sub-assemblies, including liquid crystal display (LCD) panels, LCD modules, flexible printed circuit sub-assemblies and image sensors modules and printed circuit board assembly for Bluetooth headsets. the trailing P/E is less than 10 and the price to sales ratio is 0.55, while the balance sheet has more than $5.50 per share in net cash and the stock yields 9%.

rack is a provider of servers, storage and data center solutions that target data center deployments. its products are designed to provide benefits in density, power efficiency, thermal management, ease of serviceability and remote management. the balance sheet carries no debt and $6.72 per share in cash. shares of rack are trading just slightly above tangible book value per share.

tlgd designs, engineers, markets and supports test system, test access and status monitoring products and test software for the telecommunications and cable television industries in the us and in certain international markets. its telecommunications test access products enable telephone companies to use their existing line test systems to remotely diagnose problems in Plain Old Telephone Service lines containing both copper and fiber optics. the company generated decent profits in ‘07 and expects to be more profitable in ’08, while the balance sheet contains more than $4 per share in cash.

untd is a provider of consumer Internet and media services through a number of brands, including NetZero, Juno, Classmates and MyPoints. untd's primary communications services are internet access and e-mail. its primary content and media services are social networking and online loyalty marketing. there is a lot of excitement surrounding classmates, while the legacy businesses are still generating lots of cash, the balance sheet is healthy and the stock yields 7%.

wstg is a marketer of technical software and hardware for microcomputers, servers and networks in the us and canada, targeting software development and information technology (IT) professionals within enterprise organizations. through its wholly owned subsidiary, Lifeboat Distribution Inc., the company distributes products to dealers and resellers in the us and canada. the recent quarter was sub-par in terms of the top and bottom lines, but the company still earned $0.20 per share and the trailing-12-month P/E is less than 13. the balance sheet has $5.06 per share in cash and the stock yields 6%.

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