There are many ways to measure stability on Wall Street. For you and me and other individual investors, it's a basic question of identifying the best cash cows to buy.
Some market participants prioritize metrics such as the value of a company vs its underlying assets to make sure they're not overpaying for shares.
Others seek steady operating cash flow: Money comes in steadily and substantially, fueling growth and sustaining solid business footings.
But value stocks can sometimes be value traps. And cheap stocks are often cheap for good reasons. Often, they do get cheaper.
Meanwhile, stocks with big cash flows can still be highly cyclical businesses dependent on the ups and downs of the broader economy.
At the end of the day, there really is only one measure of how stable a stock really is: cold, hard cash on the balance sheet.
That's the best indicator of a high-quality business and a solid stock to buy for the long term.
High-quality cash cows
"We continue to favor quality," writes Wells Fargo Global Equity Strategist Chris Haverland in an April 14 note.
Uncertainty over tariffs as well as concern about the consumer plus rising costs and slowing growth "will likely drag on sales, margins, profits, and valuations."
Haverland prefers U.S. large-cap stocks right now. "We suspect that lower-quality companies with less-flexible supply chains and balance sheets will have the toughest time navigating this environment," he concludes.
Charles Schwab Chief Investment Strategist Liz Ann Sonders expressed a similar view: "Screening for high-quality companies or industries is one of the best ways to play defense these days."
Sonders cited "low volatility, low beta, high interest coverage, and stable profit margins" as characteristics of companies able to survive "turbulence."
Those factors are even more important as slowing growth and sagging sentiment lead equity analysts to trim their revenue and earnings forecasts, for just about every sector and industry.
The following cash cows have resources that equip them to weather a downturn and to grow their businesses at the same time.
- Sector: Financials
- Market value: $1.12 billion
- Cash on hand: $334.2 billion
Berkshire Hathaway (BRK.B, $518.12) is closely watched by many investors for many different reasons. Warren Buffett and his folksy shareholder letters have down-to-earth market wisdom.
And the firm’s reputation for shrewd investment means its filings are closely watched as an indicator of what stocks the smart money is watching.
Lately, however, BRK.B has been attracting interest because of how much money it has on the sidelines. At the start of 2024, the company boasted roughly $167.6 billion in cash and short-term investments to set a company record.
If that wasn't enough, Berkshire Hathaway's cash stockpile roughly doubled across the year to a staggering $334.2 billion at the end of the year. The build-up in Berkshire's cash reserves reflects Buffett's experience and his current perspective.
During the 2008 Global Financial Crisis the company made tremendous use of its stockpile through shrewd and well-timed transactions. At the same time, with volatility and uncertainty spiking, Buffett may simply not want to risk making a bad move.
Either way, the strong balance sheet makes BRK.B a pretty darn reliable cash cow for the foreseeable future.
- Sector: Technology
- Market value: $1.83 trillion
- Cash on hand: $101.2 billion
A dealmaker of a very different kind, Amazon.com (AMZN, $172.58) boasted more than $101 billion in cash on hand at the end of 2024 to make it another cash cow worth watching.
Amazon has a history of bold additions to build out new arms of its business, from paying roughly $1 billion for streaming platform Twitch in 2014 to acquiring grocer Whole Foods for about $14 billion in 2017 to snapping up entertainment icon MGM for almost $9 billion in 2022.
Lately, however, the deal-making has been pretty thin at AMZN after a big $4 billion investment in AI platform Anthropic that was first announced in 2023.
At the same time, the company's net income continues to grow – as does its impressive cash stockpile.
Of course, the firm has made a big splash with a bid to acquire TikTok amid political controversies and a threat from U.S. regulators that the company must divest from its Chinese ownership or face a ban. That could seriously eat into that cash hoard if those rumors wind up having some truth to them.
Regardless, AMZN is a cash cow with plenty of dry powder to make deals in 2025 – or weather any short-term turbulence in consumer spending.
- Sector: Communications
- Market value: $1.84 trillion
- Cash on hand: $95.7 billion
Another Big Tech darling, Google parent Alphabet (GOOGL, $151.00) had "only" $96 billion on hand at the end of 2024.
That was down significantly from the previous year's tally of more than $110 billion, and the reduction wasn’t really because of any big-ticket deals.
It was about some operational spending, including infrastructure capex related to building out AI functionality. Don't think that means GOOGL is afraid to spend, however.
Just a month or so ago Google acquired Wiz, a leading cloud security platform, for $32 billion to bolster its Google Cloud offerings. The Wiz transaction will certainly take a big bite out of the end-of-year tallies.
But tremendous operational consistency and unrivalled scale make GOOGL one of the most reliable Silicon Valley stocks out there. And it still has tens of billions in dry powder.
This is another cash cow with more than enough resources to weather any short-term disruptions and/or make additional deals in the months ahead.
- Sector: Communications
- Market value: $1.27 trillion
- Cash on hand: $77.9 billion
The parent of Facebook and Instagram, among other properties, Meta Platforms (META, $501.53) is another lean and tech-savvy communications firm that has deep pockets and a history of aggressive growth via big-ticket deals.
Examples of Meta's expansive ambitions include the $19 billion takeover of messaging platform WhatsApp in 2014 and the $1 billion acquisition of Instagram in 2012.
Lately the pace of deals has slowed, in part because Meta is facing antitrust scrutiny for its current stranglehold on major digital media platforms.
And, because CEO Mark Zuckerberg is running a profitable company without any major purchases to pay for, META's cash pile continues to grow. As of the end of 2024, the firm reported nearly $78 billion in cash and equivalents.
That's not to say Meta isn’t doing anything. At the end of last year, it spent $10 billion for a massive AI data center in northeast Louisiana that's powered by dedicated natural gas facilities.
The ability to invest heavily in infrastructure like this and still keep growing its bank account makes Meta a cash cow to watch.
- Sector: Technology
- Market value: $2.73 trillion
- Cash on hand: $71.6 billion
Rounding out the list of cash cows is tech leader Microsoft (MSFT, $367.66), which has long been a leader in Corporate America for its bulletproof balance sheet.
In fact, Microsoft is one of just two companies in the U.S. that has a tip-top AAA credit rating from Standard & Poor's. (Fellow Dow Jones stock Johnson & Johnson (JNJ) is the other one.)
Microsoft has a slightly smaller stack of cash than these other stocks, but Wall Street sees it as even more creditworthy.
It also pays mammoth dividends to shareholders of about $25 billion annually. That's money it can fall back on if things ever get tight.
Its massive war chest has survived a bank-busting merger with software giant Activision Blizzard announced in 2022 that closed at a value of more than $70 billion.
Microsoft's software-as-a-service revenue model, coupled with a world-class portfolio of business tools, makes for reliable cash flow to ensure it will continue to have deep pockets for many years to come.
