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People don't invest in companies that merely have cash. Growth and recurring revenue are more important metrics to most
by djrogers 11y ago
People don't invest in companies that merely have cash. Growth and recurring revenue are more important metrics to most
- lyncnshare 11y agoIt depends on the industry. Some stock valuations show that investors in certain industries like companies to hold on to cash reserves. This is especially true in the technology space where investors want companies to be able to cash in on the next big thing. Utilities, though, see their stock punished for holding onto excess cash.
- pzone 11y agoOK, but if the company held $50 in non-cash assets and $50 in cash, the same logic would hold. The "growth and recurring revenue," stuff you're talking about is just an asset pricing restriction, which requires that the $50 in non-cash assets are not affected by moving some cash off the balance sheet. This holds if the company does not face cash constraints. (Like Apple.)