Following my article last week covering 3 ASX shares with high debt levels, this week I’m taking a look at 3 shares that have a reasonable chunk of cash on their balance sheets.
Last week’s piece highlighted some companies that are at higher risk when it came to balance-sheet health. As I said in that article, a company with a good balance sheet is often better positioned to weather economic storms. When challenging times do hit, a business with spare cash is often more likely to survive, and sometimes thrive, through hardship.
Let’s take a look at a few companies that might be able to ride out turmoil better than others.
ASX shares that have plenty of moolah
Life360 Inc (ASX: 360)
Life360 brings parenting to the digital age. It offers a range of features, such as location sharing and driving reports, to ultimately provide increased peace of mind for parents. The company’s proprietary platform had 28 million global monthly active users at the end of March 2021. This platform operates a freemium model – meaning that many customers opt for the no-cost option. However, there are paid tiers available.
At the end of December 2020, Life360 held US$56 million in cash on its balance sheet. Additionally, not a single dime of debt was in sight. This is useful for a company like Life360, given it is still loss-making.
Furthermore, that cash might come in handy in the future if this ASX share identifies more acquisition opportunities.
Temple & Webster Group Ltd (ASX: TPW)
Furniture e-commerce company Temple & Webster sprang to prominence on the back of the COVID-19 online boom. While the business was already growing steadily, the pandemic was like nitrous oxide to the e-commerce engine. Sure enough, revenue quickly roared higher – from $126.4 million at the end of 2019 to $263.8 million by the end of 2020 for this ASX share.
Over this time, Temple & Webster’s profit margin lifted from 2.9% to 8.8%. The higher margins meant the company was adding to its cash reserves rapidly. At the end of last year, cash and cash equivalents came to $38 million. Giving its balance sheet that extra shine, Temple & Webster also had no debt as well.
Temple & Webster is already profitable, so it can use its cash to push heavier marketing, acquire other companies, or simply hold on to it for a rainy day.
Redbubble Ltd (ASX: RBL)
Redbubble is an e-commerce company with a twist. Rather than simply selling its own products, it offers the world’s largest marketplace for independent artists. According to its first-half trading update, approximately 570,000 artists made sales through the marketplace during the half-year period.
It has been a challenging 5 to 6 months for Redbubble, which has been dogged by margin contraction and reduced growth. However, unless the company swings to unprofitability again, the cash reported at the end of December should still be there – all $129.7 million of it.
Considering Redbubble also held no debt at that time, it might be able to tap into its cash reserves to fund future growth initiatives.