Stock picks to buy: 17 cash-rich companies built for coronavirus recession - Business Insider

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'If you're going to dip a toe, start here': Citi says these 17 cash-rich stocks are perfect for traders seeking cheap opportunities in a coronavirus-hit market

But just because equities have been pulverized doesn't mean you should just scoop up issues indiscriminately. , thinks he knows exactly where to start the search — and he's putting a strong emphasis on quality, value, and leverage.

"As explained by Citi's Global Strategy team, companies with high FCF [free cash flow] typically have higher margins and lower capex, thereby maximizing profitability," he penned in a recent note to clients. "If you're going to dip a toe, start here." To Jullier, companies with high free cash flow have a leg up on the competition. The optionality that comes hand-in-hand with robust cash flows makes these firms especially enticing during times of turmoil. They can deploy their capital in a multitude of ways.

But Jullier's analysis doesn't stop there. In total, he studies a confluence of four metrics to arrive at his recommendations."Screen for companies with a pre-tax FCF/EV yield of greater than UST+300bps. This filters for companies that have been able to maximize profitability.""Companies that rank in the bottom 60th percentile in terms of leverage, as measured by net debt/EBITDA, total debt/EV, and quick ratio.

With all of that under consideration, here are 17 stocks identified by Citi as having exceptional high pre-tax free cash flow yield. They're listed in increasing order.

 

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