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Why Strategist Is 'Worried' by Debt-Free Firms

Large debt loads can weigh on a company's balance sheets, but a firm not having debt doesn’t necessarily mean it’s a money-making business. So are debt-free companies good investments right now? Doug Sandler, co-founder of Riverfront Investment Group, discussed his insights.

“It’s like a mortgage on the house—it’s not stupid to have a mortgage just because you go in debt,” Sandler told CNBC.

“So for the companies with no debt, what I’d be worried about is that it also has languishing growth.”

Companies should think about levering up and amplifying returns or investing in their business—before someone else comes in and takes that business from them, explained Sandler.

“Huge debt is obviously a bad thing, but I wouldn’t restrict my shopping list to strictly companies with no debt,” he said.

Top Companies With Zero Debt:

Google

Apple

EBay

Forest Laboratories

Celgene

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Scorecard—What They Said:

  • Sandler's Previous Appearance on CNBC (Jun. 30, 2010)
  • Yoshikami's Previous Appearance on CNBC (Jul. 12, 2010)

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CNBC Slideshows:

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More Market Views:

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CNBC Data Pages:

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Disclosures:

No immediate information was available for Sandler or Yoshikami.

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Disclaimer

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