Buy these 14 stocks flush with the cash reserves to survive a prolonged coronavirus crisis, BTIG says

Reuters

• Long-term investors should seize the opportunity to buy quality companies that are "built to survive" a long coronavirus crisis, says BTIG's Julian Emanuel.
• He screened 14 companies including Apple and Berkshire Hathaway that fit the bill because of their low debt, healthy cash piles, and strong credit ratings.
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Investors are strapped in for the long road to recovery after experiencing the initial shock of the coronavirus pandemic.

The first wave included a slew of stock-market superlatives including the worst first quarter ever and the end of a record-long bull run.

Moving forward, long-term investors should seize the opportunity to buy stocks that can weather the downturn, according to Julian Emanuel, the chief equity and derivatives strategist at BTIG. He calls such companies "sound sleepers" - presumably because investors can buy and hold them with confidence.

To guide the stock selection process, Emanuel screened S&P 500 companies for three main characteristics.

First, he looked for stocks with excellent liquidity, defined as those with cash ratios in the top quintile. These companies hold sufficient cash to repay their current liabilities.

Emanuel also screened for stocks that are using very little debt to finance their daily operations, and found them by filtering the bottom quintile of net debt-to-equity ratios.

Finally, he picked companies that can easily repay their debt; only companies with an S&P credit rating of A- and above made the cut.

"Such companies are 'built' to survive a more prolonged period of uncertainty should the virus linger into 2H2020," Emanuel said in a recent client note.

His list is reproduced below and is not sorted in any particular order.

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