Forty percent of all the cash on S&P 500 balance sheets (excluding financial companies). Does this make them worth buying?
A recent study by ISI Group analyst Bill Whyman has determined that, if one excludes financial firms, tech companies hold 40% of all the cash on the combined balance sheets of S&P 500 stocks. Not bad for only 70 companies in that index. Including Apple, that amount is $554 billion, both in the US and abroad.
There’s a lot more to tech stocks than just the current cash on their balance sheets, of course. There’s the value of future growth in their net incomes.
One of the ways investors monitor the tech sector as a whole is through the NASDAQ-100 Index, an index that made up of the 100 largest stocks in the tech-heavy NASDAQ exchange. About a third of the index's weight is comprised of Apple, Microsoft, Google, Oracle, and Cisco.
Is this large cash balance a sign that there’s good value and upside potential in tech? And, if so, should you take a position in the NASDAQ-100?
We asked Talking Numbers Enis Taner, Global Macro Editor at RiskReversal.com, and Richard Ross, Global Technical Strategist at Auerbach Grayson, to look at the ETF that tracks the NASDAQ-100, the PowerShares QQQ.
To hear Taner and Ross analyze PowerShares QQQ, watch the video above.