Five stocks to love from CNNMoney

Posted May 19th 2008 4:19PM by Eliza Popescu
Filed under: Hewlett-Packard (HPQ), International Business Machines (IBM), Electronic Data Systems (EDS), Genentech Inc (DNA)

It has been a rocky year for Wall Street, but even amid the uncertain market conditions there are some companies that are playing with a lot of cash. In addition, they know how to wisely use their funds, which makes them strong enough to beat any challenge.

One important factor that determines the stability of a company is its corporate cash flow. CNNMoney is looking at stocks with both healthy cash flow and a surplus of cash, which helps them avoid tough situations where they may need to raise their capital (check out its slideshow of these five picks). Another element that CNNMoney takes into account when picking companies is their ability to reinvest cash in ways that assure them a nice profitability.

Let's look at some of the companies that CNNMoney likes:

Hewlett-Packard (NYSE: HPQ) stirred up a lot of comments after it announced its plans to buy Electronic Data Systems (NYSE: EDS) for about $14 billion in order to better compete against its major rival IBM (NYSE: IBM). The company proved its performance for the past three years as its stock has more than doubled.
National Oilwell Varco (NYSE: NOV) managed to double its profit last year to $1.3 billion and is seen by some analysts as a "capital-generating machine." In addition, current soaring oil prices make the company a nice bet amid the weak environment.
Big Lots (NYSE: BIG) successfully passed through the current economic climate and announced better-than-expected earnings over the past eight quarters. Analysts also expect the company to improve its sales due to the acquisition of furniture line Broyhill.
Accenture (NYSE: ACN) made itself evident by its ability to efficiently use the cash. Its strategy was quite simple as it focused on investing money in people. Could be surprising but this came with 86% return on equity.
Genentech (NYSE: DNA) used its cash to fund research and development. The company exploited areas that other drugmakers may have ignored and this assured it the success.

Cash is the key factor that makes a company fail or succeed in the market. CNNMoney advises us to seek those companies that are able to generate a lot of cash, which brings them the victory crown.

Eliza Popescu is a financial writer for the online investment advisory service Investor's Observer.

Tags: Accenture, acn, big, Big Lots, BigLots, CNNMoney, DNA, eds, Electronic Data Systems, ElectronicDataSystems, Genentech, Hewlett-Packard, hpq, ibm, inthenews, National Oilwell Varco, NationalOilwellVarco, nov