One of the things we like to focus on when selecting stocks for our deep value stock screens here at The Acquirer’s Multiple are companies with strong balance sheets.
In a recent article Business Insider reports that cash-rich companies are king in the stock market right now. The article states that shares of firms with strong balance sheets are up 11% since the start of the year, outpacing their flimsier brethren by 3.5 percentage points, according to data compiled by Goldman Sachs and Bloomberg. That’s the widest spread in 14 months for a period of that length.
Here’s an excerpt from that article:
The recent outperformance has helped the strong balance sheet group close the gap on its weaker peers, which have piggybacked off an unprecedented wave of debt financing to bigger gains throughout the eight-year bull market.
In other words, they [investors] want to buy stocks with strong balance sheets — ones with easy access to liquidity and minimal debt exposure.
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