11 Oversold Companies With Enough Cash to Cover 1+ Years of Operating Expenses

If you're looking for rebound ideas, the following list might offer a good starting point for your own analysis.

Listed below are eleven oversold stocks with RSI(14) readings below 40, which usually indicate oversold conditions. All of these companies also have enough cash to cover at least 4 quarters of their average quarterly operating expenses (based on the last four quarters, not incorporating potential increases or decreases in future operating cash flows).

To compile this list, we calculated the average quarterly operating expense over the last four quarters, and compared it with current cash holdings for each firm. All companies listed below have more than 4x cash for their avg. quarterly operating expense, translating into 4+ quarters coverage of avg. operating expenses.

Considering the cash holdings of these firms, do you trust them to bounce back soon? Refer to the data below for guidance.

Operating expenses and cash data from Google finance, all other data from Finviz.

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List sorted by Cash/Avg. Quarterly Operating Expenses.

1. InterDigital, Inc. (IDCC): Wireless Communications Industry. Market cap of $2.10B. RSI(14) at 35.01.

Current cash holdings at $541.67M vs. average quarterly operating expenses over the last four quarters at $50.04M. Cash/Avg. Quarterly Operating Expenses at 10.8, i.e. the company can go 10.8 quarters without generating revenue and still cover the average quarterly operating costs.

The stock has relatively low correlation to the market (beta = 0.7), which may be appealing to risk-averse investors. IDCC is also a short squeeze candidate, with a short float at 17.42% (equivalent to 6.84 days of average volume).

2. Google Inc. (GOOG): Internet Information Providers Industry. Market cap of $193.11B. RSI(14) at 36.97.

Current cash holdings at $34.98B vs. average quarterly operating expenses over the last four quarters at $4.73B. Cash/Avg. Quarterly Operating Expenses at 7.4, i.e. the company can go 7.4 quarters without generating revenue and still cover the average quarterly operating costs.

3. Novell Inc. (NOVL): Security Software & Services Industry. Market cap of $2.05B. RSI(14) at 28.28.

Current cash holdings at $1.13B vs. average quarterly operating expenses over the last four quarters at $180.01M. Cash/Avg. Quarterly Operating Expenses at 6.3, i.e. the company can go 6.3 quarters without generating revenue and still cover the average quarterly operating costs.

4. Salix Pharmaceuticals Ltd. (SLXP): Generic Drugs Industry. Market cap of $1.93B. RSI(14) at 25.45.

Current cash holdings at $518.03M vs. average quarterly operating expenses over the last four quarters at $85.79M. Cash/Avg. Quarterly Operating Expenses at 6.0, i.e. the company can go 6.0 quarters without generating revenue and still cover the average quarterly operating costs.

The stock is currently stuck in a downtrend, trading 17.26% below its SMA20, 23.68% below its SMA50, and 20.98% below its SMA200. The stock has also performed poorly over the last month, losing 17.84%.

5. Cree Inc. (CREE): Semiconductor Equipment & Materials Industry. Market cap of $5.45B. RSI(14) at 31.06.

Current cash holdings at $1.11B vs. average quarterly operating expenses over the last four quarters at $192.55M. Cash/Avg. Quarterly Operating Expenses at 5.8, i.e. the company can go 5.8 quarters without generating revenue and still cover the average quarterly operating costs.

It's been a rough couple of days for the stock, losing 6.37% over the last week. That's significant when you consider that the stock is a short squeeze candidate--short float at 19.13% (equivalent to 6.07 days of average volume). How long before the shorts cover their positions?

6. Dolby Laboratories Inc. (DLB): Diversified Electronics Industry. Market cap of $5.75B. RSI(14) at 27.92.

Current cash holdings at $704.23M vs. average quarterly operating expenses over the last four quarters at $127.45M. Cash/Avg. Quarterly Operating Expenses at 5.5, i.e. the company can go 5.5 quarters without generating revenue and still cover the average quarterly operating costs.

7. E*TRADE Financial Corporation (ETFC): Investment Brokerage Industry. Market cap of $3.52B. RSI(14) at 33.3.

Current cash holdings at $2.98B vs. average quarterly operating expenses over the last four quarters at $570.03M. Cash/Avg. Quarterly Operating Expenses at 5.2, i.e. the company can go 5.2 quarters without generating revenue and still cover the average quarterly operating costs.

Note that ETFC is a risky stock that is significantly more volatile than the overall market (beta = 2.06). The stock has also lost 5.24% over the last year.

8. Cisco Systems, Inc. (CSCO): Networking & Communication Devices Industry. Market cap of $101.72B. RSI(14) at 27.34.

Current cash holdings at $40.23B vs. average quarterly operating expenses over the last four quarters at $8.41B. Cash/Avg. Quarterly Operating Expenses at 4.8, i.e. the company can go 4.8 quarters without generating revenue and still cover the average quarterly operating costs.

The stock is currently stuck in a downtrend, trading 6.33% below its SMA20, 10.65% below its SMA50, and 16.26% below its SMA200. The stock has also performed poorly over the last month, losing 14.89%.

9. NetApp, Inc. (NTAP): Data Storage Devices Industry. Market cap of $18.81B. RSI(14) at 35.96.

Current cash holdings at $4.76B vs. average quarterly operating expenses over the last four quarters at $1.01B. Cash/Avg. Quarterly Operating Expenses at 4.7, i.e. the company can go 4.7 quarters without generating revenue and still cover the average quarterly operating costs.

10. Red Hat, Inc. (RHT): Application Software Industry. Market cap of $7.90B. RSI(14) at 34.92.

Current cash holdings at $845.44M vs. average quarterly operating expenses over the last four quarters at $181.53M. Cash/Avg. Quarterly Operating Expenses at 4.7, i.e. the company can go 4.7 quarters without generating revenue and still cover the average quarterly operating costs.

11. Microsoft Corporation (MSFT): Application Software Industry. Market cap of $218.04B. RSI(14) at 29.91.

Current cash holdings at $41.25B vs. average quarterly operating expenses over the last four quarters at $10.08B. Cash/Avg. Quarterly Operating Expenses at 4.1, i.e. the company can go 4.1 quarters without generating revenue and still cover the average quarterly operating costs.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.