Thursday, September 25, 2008

Leverage is Suddenly A Dirty Word

Leverage is suddenly a dirty word, after many years of its exhortation by investors and managements. Just think of all those managers who are wishing they had never spent money buying back stock at much higher prices! There are managements, however, who have always scorned debt and leverage and kept pristine balance sheets with tons of cash just in case. Here are a few for you to consider in your search for Alpha.

Barrett Business Services Inc. (BBSI) - I wrote about this stock in two earlier posts on The Div-Net (Original) and the (Follow Up)

BBSI is in the Staffing services business, and the company has no debt, and $46.7 million in cash, or $4.35 per share.

CKX Lands (CKX) – Another company that didn’t drink the Kool-Aid that Wall Street was pushing the last few years is CKX Lands, a company that owns thousands of acres of land in Louisiana. The company has no debt, and $6 million in cash, or just over $3 per share.

Sycamore Networks Inc. (SCMR) – The last stock is Sycamore Networks, a telecommunications equipment company. The company has no debt, and $821 million, or $2.89 in cash.

Disclosure – I am long CKX Lands.

This article was written by the Stock Market Prognosticator. If you enjoyed this article, please vote for it by clicking the Buzz Up! button below.

2 comments:

  1. Cash is King, Queen and the whole palace right now, but leverage is still the only way to exponentially grow wealth over the long term.

    ReplyDelete
  2. Tyler...please explain this comment:

    "leverage is still the only way to exponentially grow wealth over the long term."

    ReplyDelete

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