Red Hat Inc fka RHT

[johnsyn]

8 companies you didn't know had so much money

11:36 AM 11/16/2012 - MarketWatch

SAN FRANCISCO (MarketWatch) -- Forget sand bags. In turbulent, unforgiving stock markets, you want money bags.

U.S. stocks have lost 4% so far this month. Fretful investors are selling winners to position their portfolios against tax changes the White House and Congress may make on capital gains and dividend income to avoid the so-called fiscal cliff.

Against this uncertain backdrop, MarketWatch figured it would be useful to look for companies that have fortified their balance sheet.

We searched for businesses with no long-term debt and cash on hand of $500 million or more. Plus, the companies had to show free-cash-flow growth and operating margin improvement year-over-year since 2010 (data was based on the 12-month period ended Sept. 30).

Of the 1,500 Standard & Poor's-rated companies screened on FactSet, only eight made the cut. For investors looking to put their cash to work when the dust settles over the fiscal-cliff hysteria, these stocks may be worth a look.


6. Red Hat

Red Hat Inc. has seen annual revenue and operating cash flows increase at a nice clip over the past three years. The North Carolina-based company makes subscription-based, open-source software used by companies to customize databases and products.

Analysts estimate Red Hat's revenue will grow 17.1% for its current fiscal year that ends in February and 16.3% for fiscal 2014, FactSet data shows.

The stock isn't exactly cheap, trading at 36.2 times forward earnings. Rival Oracle Corp. trades at 10.6 times earnings and VMware Inc. at 26.6 times earnings.

Red Hat shares are 25% off their 52-week high, reached in April. The stock closed Thursday at $47.73.

If an investor considers the stock, veteran money manager Alan Lancz said he'd suggest accumulating a small position in the mid-$40s-a-share range and wait to buy more if the stock declines another 15% to 20%.