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Stock Screen: Cash is King!

Stock Screen: Cash is King!

. 3 min read

Stock Screen: Cash is King!

The goal of this screen is to find strong defensive stocks that have plenty of liquidity and strong fundamentals.

You can view the latest results here: Screen: Cash is King


In this section, I'll summarize the key filters used in the default Cash is King! screen:

  • Cash / Total Capital > 10%
  • Current Ratio > 1.5x
  • Debt / Total Capital < 10%
  • Return on Assets > 10%
  • Levered Free Cash Flow Margin > 10%

Filter 1: Cash / Total Capital

Cash / Total Capital measures a company's the amount of cash on hand in the current capital structure.

Cash / Total Capital = Cash / (Debt + Market Cap)

Companies with high cash balances are better equiped to survives business and economic cycles so I wanted Cash / Total Capital to be greater than 10%:

Filter Cash / Total Capital

To get guidance on threshold, I used the STAT BY SECTOR button. At the time of this writing (July 27, 2016), the median company in each sector maintained between 1% - 9% Cash / Total Capital:


Filter 2: Current Ratio

Current Ratio measures whether a firm is capitalized with enough assets to pay its debts over the next twelve months by comparing a firm's Current Assets to its Current Liabilities.

Filter Current Ratio

Filter 3: Debt / Total Capital

Debt / Total Capital measures a company's current capital structure, financial solvency, and degree of leverage.

Debt / Total Capital = Debt / (Debt + Market Cap)

Companies with a lot of debt to service may come under pressure in a downturn. I wanted to exclude any companies with more debt than cash on hand:

Filter Debt / Total Capital

Filter 4: Return on Assets

Return on Assets represents the dollars in Net Income a company generates per dollar of Assets. This criterion filters out companies that are not profitable.

Filter Return on Assets

Filter 5: Levered Free Cash Flow Margin

Levered Free Cash Flow Margin (LFCF Margin) represents a company's cash flows after interest payments on outstanding debt as a percent of Total Revenue. These cash flows are typically retained by the company or distributed to shareholders in the form of dividends. I wanted to surface companies with strong LFCF Margins so I added the following filter:

Filter LFCF Margin

Downloading Results

Once the screen returns the relevant matches, you can either research the individual names further or create a portfolio based on the results.

To add any match to your Watchlist, just click the icon:

Add Watchlist

You can also Save the screen run again at a later time or Download all the
matching results:

Download Save

Sources / Further Reading: