3 Cash-Rich Corkers: ARM Holdings plc, Burberry Group plc And Boohoo.Com PLC

Cash-rich ARM Holdings plc (LON:ARM), Burberry Group plc (LON:BRBY) and Boohoo.Com PLC (LON:BOO) look great value for money.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

I’ve never been the biggest fan of so-called “efficient” balance sheets. Too often this simply amounts to loading the balance sheet with debt to turn a poor return on assets into a decent return on equity — disguising a humdrum business as something better than it is.

Furthermore, whizzy efficient balance sheets often implode when hard times hit, sucking the value out of shareholders’ equity, as happened in many cases during the 2008/9 financial crisis.

Inflation Is Coming

Inflation is out of control, and people are running scared. But right now there’s one thing we believe Investors should avoid doing at all costs… and that’s doing nothing. That’s why we’ve put together a special report that uncovers 3 of our top UK and US share ideas to try and best hedge against inflation… and better still, we’re giving it away completely FREE today!

Click here to claim your copy now!

No, give me a cash-rich company any day — one that can make me a good return on my investment without leverage. Sure, cash sitting on a balance sheet may be relatively unproductive for much of the time, but it provides a buffer during periods of stress, as well as giving financial flexibility; for example, to cherry-pick assets at knock-down prices from companies whose efficient balance sheets have got them into trouble!

ARM Holdings

FTSE 100 tech giant ARM Holdings (LSE: ARM) (NASDAQ: ARMH.US) has no debt, and is swimming in cash. At the last reckoning, the chip designer had £922m of spare change. To put that into some perspective for you, the cash figure is not far short of the total operating profit made by the company over the last five years.

ARM has a market-leading position and high margins. With costs increasing at a slower rate than revenue, profits have been rising strongly and excess cash has been rapidly accumulating on the balance sheet. Analysts expect no let-up in the company’s growth in the foreseeable future.

Of course, a business such as ARM doesn’t come cheap. The 12-month forward price-to-earnings (P/E) ratio is currently 33. However, that’s on the value side of ARM’s historical rating level; and the P/E is even cheaper — 31 — if we adjust for the surplus cash.


Iconic British fashion house Burberry (LSE: BRBY) is another rare FTSE 100 firm with net cash on its balance sheet. Burberry’s cash pile isn’t as big as ARM’s and the company also makes use of bank overdrafts. Nevertheless, net cash is rising at a good clip — up to £552m from £403m a year ago.

However, we should note that Burberry has sizeable lease commitments, like many retailers with substantial bricks-and-mortar estates. These lease commitments can be viewed as off-balance-sheet debt, so I wouldn’t be inclined to adjust Burberry’s P/E for the cash on the balance sheet. Nevertheless, the vanilla 12-month forward P/E of 20 represents decent value for a business with a record of strong earnings growth, and the prospect of more to come.


Online fast fashion firm Boohoo (LSE: BOO) is a smaller company than ARM and Burberry, being listed on London’s junior AIM market (since March 2014). Despite being a young growth company, requiring hefty expansion and brand investment, Boohoo has maintained (actually slightly increased) a net cash position of over £50m since its flotation.

Investors got over-excited when Boohoo came to the market and the shares traded at silly levels for a while. However, sanity has prevailed and the company currently trades on a 12-month forward P/E of around 25, which falls to 20 if adjusted for the cash. Either way, Boohoo looks an attractive investment, because forecast earnings growth is higher than both the lower and upper P/E figures, indicating good value for money.

More on Investing Articles

Warren Buffett at a Berkshire Hathaway AGM
Investing Articles

How I’d apply the Warren Buffett method to buying shares

Learning from billionaire investor Warren Buffett, our writer explains his own approach to investing in shares for his portfolio.

Read more »

pensive bearded business man sitting on chair looking out of the window
Investing Articles

This dividend share yields under 1% — but I’d still buy it

This dividend share has a low yield. So why would our writer consider adding it to his income portfolio?

Read more »

Young lady working from home office during coronavirus pandemic.
Investing Articles

Looking for a good share to buy? Here’s how I do it

Here are two approaches our writer uses when hunting for a good share to buy for his portfolio to aim…

Read more »

man in shirt using computer and smiling while working in the office
Investing Articles

One cheap FTSE 100 share I’d buy for a new bull market

This FTSE 100 share is unloved and starting to look seriously cheap, says Roland Head.

Read more »

Young brown woman delighted with what she sees on her screen
Investing Articles

How I’d invest £500 in UK shares in 2022

Investing a small amount of capital in UK shares can result in high commission costs. Zaven Boyrazian explains how to…

Read more »

Black woman using loudspeaker to be heard
Investing Articles

2 battered FTSE dividend stocks to buy in July!

I'm still searching the FTSE 100 for the best bargains to buy. I think these two big dividend shares are…

Read more »

Woman pulling baffled face
Investing Articles

Can I trust Lloyds’ 6.1% dividend yield?

The Lloyds' share price has sunk in 2022, causing the bank's dividend yield to leap. But can I really trust…

Read more »

Young mixed-race woman looking out of the window with a look of consternation on her face
Investing Articles

3 top stocks to buy before the market rebounds

Edward Sheldon highlights three beaten-up stocks he'd buy before global stock markets stage a recovery from their 2022 declines.

Read more »