The large number of businesses that have had to close their doors permanently as a result of the COVID-19 crisis is alarming. A common theme among those businesses is the high levels of debt, the lack of cash reserves and the negative cash flow they have. Not many companies can survive when the stock market crashes so rapidly, along with a dramatic decrease in consumer demand. However, some of the familiar tech giants have largely been unaffected by the COVID-19 crisis due to substantial cash reserves and minimal debt. We’ve taken a close look at five tech companies that should not only hold strong during the crisis, but also provide future investment opportunities as they are set up to thrive once it passes.
According to the most recent numbers posted, Amazon has over $49 billion in cash, marketable securities and cash equivalents. While their revenue growth has been impressive, the COVID-19 crisis has led to more costs and could impact their cash growth for the rest of the year at least. The total debt Amazon currently carries is $24.8 billion, for a debt-to-equity ratio of 2.6.
Microsoft’s most recent numbers indicate they carry a cash level of $137.6 billion with $62.9 billion in debt. Commercial cloud businesses have helped Microsoft’s cash growth in recent years and have played a major role in offsetting some of the slower growth in the Windows OEM, gaming units and hardware. The interesting battle to watch for investors is Microsoft Azure vs. Amazon Web Services, as cloud infrastructure continues to be a focal point in the stock market.
Alphabet’s $117.2 billion in marketable securities, cash and cash equivalents equates to a roughly 3% growth year-over-year. Their low debt-to-equity ratio of 0.4 is impressive despite having to pay significant fines recently due to the mishandling of consumer information. The COVID-19 crisis has impacted their cash as companies have slowed their spending on advertisements, but the impact should not be significant moving forward.
Facebook has no debt and more than $60 billion in cash and cash equivalents. This is one of the main reasons why their growth of 33% year-over-year has been astronomical compared to other tech giants. It’s in the perfect position to hold steady and even grow through the COVID-19 crisis, no matter what the stock market does.
Apple has the most cash of any of the five tech companies mentioned at over $192 billion. However, they do have a total term debt of over $99 billion for a debt-to-equity ratio of 3.1, which is the highest among the five companies mentioned. The COVID-19 crisis has not negatively impacted Apple’s liquidity and the company may even raise dividends soon.
At Stock Investing Info, we take close looks at which companies offer the best investment opportunities for our clients now and in the future. The task of portfolio management can be difficult to navigate alone, and we are here to help. Contact us today for assistance and advice in any aspect of your investment portfolio.