Best Cash Cows to Buy

These cash cow stocks and their bulletproof balance sheets are built to weather Wall Street's and Main Street's prevailing storms.

artist rendition of cow with dollar sign in the place of a spot
(Image credit: Getty Images)

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.

Jeff Reeves
Contributing Writer, Kiplinger.com

Jeff Reeves writes about equity markets and exchange-traded funds for Kiplinger. A veteran journalist with extensive capital markets experience, Jeff has written about Wall Street and investing since 2008. His work has appeared in numerous respected finance outlets, including CNBC, the Fox Business Network, the Wall Street Journal digital network, USA Today and CNN Money.