Buy Companies With Cash
Lately we've been recommending three kinds of plays: companies that are traditional defensive, recession-resistant names, companies with massive and safe dividend yields, and companies that are trading at or near their cash per share.
Tuesday night Jim recommended Bebe Stores as part of the last group, a company with $4 of cash per share and, when we highlighted it, a $7.21 stock. I think it's time for an update on another company we've recommended multiple times for the same reason, KBR.
We first highlighted KBR back on Oct. 1, with the stock at $15.13, partially because it had $9 of cash per share. Now that the stock has fallen to $13 and change, its cash represents two-thirds of its share price. Unlike Bebe, which was up 13% yesterday, KBR closed up just a penny, although it did have a major rally from its lows.
Since the last time we talked about KBR it's won some major contracts, a $197 million contract with the U.S. Army on Friday, and Wednesday a contract for an undisclosed amount with a firm in Abu Dhabi.
If you liked Bebe because it was trading so close to its cash per share, you should really take a look at KBR.
Cliff Mason is the Senior Writer of CNBC's Mad Money w/Jim Cramer, and has been that program's primary writer, in cooperation with and under the supervision of Jim Cramer, since he began at CNBC as an intern during the summer of 2005. Mason was the author of a column at TheStreet.com during 2007, which he describes as "hilarious, if short-lived." He graduated from Harvard College in 2007. It was at Harvard that Mason learned to multi-task, mastering the art of seeming to pay attention to professors while writing scripts for Mad Money. Mason has co-written two books with Jim Cramer: Jim Cramer's Mad Money: Watch TV, Get Richand Stay Mad For Life: Get Rich, Stay Rich (Make Your Kids Even Richer). He is 100% responsible for any parts of either book that you did not like.
Mason has also had a fruitful relationship with Jim Cramer as his nephew for the last 23 years and will hopefully continue to hold that position for many more as long as he doesn't do anything to get himself kicked out of the family.
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