Sunday, April 7, 2013

Next Stock Price Catalyst: Cash On The Sidelines?

One of the catalysts you may have heard discussed recently that will bring corporate growth (and subsequent growth in share prices) is the ocean of cash corporations have available "on the sideline." Analysts will tell you that these corporations could build new factories, invest in new products, hire new people, or best of all; buy back more of their own shares.

What is the problem with this great story?

It only looks at one side of the balance sheet.

The interactive graphic below courtesy of MISH and Mike Klaczynski at Tableau Software provides one of the best visuals you will find for the balance sheets of the top 50 largest corporations in America.

The green lines show the "ocean of cash" these corporations are holding. What are the pink lines that are suffocating those tiny green lines?


The actual cash available in relation to their debt is negative $850 billion.

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