Bullet-Proof Balance Sheets

Companies with large cash balances are better positioned to finance their own growth – which can help generate even more surplus cash. Strong balance sheets can also give companies the flexibility to either reinvest in their business or consider buying distressed assets during times of economic uncertainty and tight credit conditions. Meanwhile, companies with too much debt could be sweating out creditors and the chance of rising interest rates.

This motif provides exposure to companies with the highest net cash balances and average positive earnings during the past three years.

We identified US-listed stocks and American Depository Receipts of companies that are engaged in activities relevant to this watchlist's theme. We then filtered out companies that have a share price of less than $1.00 or a market capitalization less than $100 million, and excluded illiquid stocks by screening companies for liquidity i.e. average bid-ask spreads, dollar volume traded etc. Finally the proprietary Motif Optimization Engine determined the constituent stocks. Learn more about how we select our watchlists.

Motif is an online brokerage built on thematic portfolios of up to 30 stocks and ETFs. Founded in 2010 by Hardeep Walia, Motif combines complex proprietary algorithms with skilled advisers to develop these thematic portfolios. Learn more about our team.

First, we determined each company's percentage of total revenue derived from this watchlist's theme. Second, we applied a pure-play factor to give greater relative weight to companies that derive a higher percentage of their revenue from this theme. Finally, we weighted each company by its market capitalization adjusted for revenue exposure to the theme.

More details on how we build and weight watchlists are available here.