There aren't too many things more valuable than a stack of cash during rocky economic times. Surprisingly though, there are only 53 companies inside the S&P/ASX 200 Index (ASX: XJO) that are currently in a net cash position.
The prospects of a looming recession in 2023 are beginning to show. Overnight, one of the world's biggest tech companies, Microsoft Corp (NASDAQ: MSFT), announced it was letting go of 10,000 employees in preparation for a challenging future.
If a recession were to materialise, having plenty of cash on hand (with minimal debt) could mean a company weathers the storm, whereas others with weaker balance sheets might not. It can also allow companies to be opportunistic — making strategic acquisitions and growing market share.
Here are three companies that are currently cashed up.
These ASX 200 shares are rolling in dough
Before we get underway, it is worth mentioning that there are ASX-listed companies with more net cash than those that will be highlighted below.
For example, CSL Limited (ASX: CSL) almost tops the list with $1,130 million in net cash, but it also has plenty of debt. The biotech giant held approximately 57% of its equity in debt at the end of June 2022.
The companies included below hold a large pile of net cash, but also a relatively low exposure to debt.
Magellan Financial Group Ltd (ASX: MFG)
You might be caught off guard by Magellan making an appearance in this list after its share price has fallen 47% over the past 12 months.
Despite the immense panic surrounding the fund managers' declining funds under management (FUM), the company can attest to holding $420 million in net cash. To Magellan's credit, the balance sheet remains debt free at this time.
However, the question is: Will the company's fortress-like balance sheet remain intact as it tries to curb outflows? On 6 January, Magellan reported a further 10% decline in FUM to $45.3 billion. Shockingly, this is 60% less money being managed by the company compared to a year ago.
Lynas Rare Earths Ltd (ASX: LYC)
The next entrant to the 'swimming in cash' ensemble is the rare earths miner and refiner — Lynas Rare Earths. This ASX 200 company has also hit a rough patch for its share price — sliding 23% throughout the last year.
Nevertheless, a falling share price hasn't stopped Lynas from raking in monster profits lately. In FY22, the company reported $540.8 million in earnings at a 59% net profit margin… mindblowing stuff! The rare earth bonanza has helped fortify the balance sheet with $779 million in net cash.
Lynas is slated to report its latest quarterly results on 30 January.
Whitehaven Coal Ltd (ASX: WHC)
Last but not least is the coal-producing Whitehaven Coal. Parading a mindboggling net cash holding of $1,169 million.
It's a turnaround story if I've ever seen one. A year and a half ago, Whitehaven had $729 million of debt hanging over its head with just a smidgen of cash. Now, the company's debt is less than $50 million and is almost insignificant compared to its cash holdings.
The monumental change has been the result of abnormally high profits due to record coal prices. Based on current forecasts, the earnings windfall for this ASX 200 share could be even larger in FY23.
