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2 Safe Bets for Your Long-Term Gains: Meet the Balance Sheet Champs
Zero Debt, High Cash: The Recipe for Your Long Term Wealth
Dividend Dominator
April 21, 2025
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👉️ Two Safe Bets for Your Long-Term Gains: Meet the Balance Sheet Champs 🏆️
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“Only buy something that you’d be perfectly happy to hold if the market shut down for 10 years.”
Wall Street slashes stock market forecasts amid Trump tariff fears
Wall Street banks, including JPMorgan $JPM ( ▲ 1.02% ) and Bank of America $BAC ( ▲ 0.21% ), have significantly lowered their S&P 500 forecasts for 2025, now expecting a modest 2% gain in 2025.
This downgrade is largely due to fears of new tariffs proposed by President Donald Trump, which could disrupt global trade, increase inflation, and pressure corporate earnings.
The Banks cite potential economic challenges, such as higher costs for consumers and reduced growth prospects, as key factors behind the cautious outlook.
This pessimistic outlook reflects a recalibration of expectations as Wall Street tries to understand the uncertainty of policy changes and their ripple effects on the global economy.
2 Safe Bets for Your Long-Term Gains: Meet the Balance Sheet Champs
Welcome to another edition of The Profit Zone, your one-stop shop for building long term wealth.
Today we’re spotlighting 2 companies with bulletproof balance sheets that are built to last.
We’ll unpack their financial strength, calculate their Altman Z-Scores for bankruptcy risk, and compare them to competitors.
Let’s dive in!
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Why Balance Sheets Matter
A strong balance sheet signals a company can handle downturns, fund growth, and reward investors.
In todays issue of The Profit Zone, we prioritize low debt, large cash reserves, and steady profits.
The Altman Z-Score, which blends 5 financial ratios, measures this stability.
A score below 1.8 signals the company is likely headed for bankruptcy, while companies with scores above 3 are not likely to go bankrupt
1. Monolithic Power Systems $MPWR ( ▼ 0.24% )
What They Do:
Monolithic Power Systems designs power-efficient circuits for smartphones, laptops, and data centres. Becoming increasingly vital in a tech-driven world.
Why They’re Strong:
Monolithic has very minimal debt, a rare occurrence in tech.
Their Q4 2024 balance sheet shows $1.565 billion in total current assets, mainly comprised of cash, cash and equivalents and short term investments, versus $471 million in liabilities.
Their equity-to-asset ratio (0.87) tops ~88% of semiconductor peers.
With 22.3% annual revenue growth over 3 years, forecasted to grow at 17.7% over the next 3 years and a 33.97% net profit margin, they’re printing profits.
Altman Z-Score:
During the past 13 years, Monolithic Power Systems's highest Altman Z-Score was 50.04. The lowest was 21.66. And the median was 28.02.
The current Altman Z-Score is 35 which is considered very strong.
Sustainability:
Being practically debt-free, Monolithic has the ability to fund R&D and acquisitions as they wish.
Their energy-efficient chips ride the green tech wave, ensuring demand, and their high margins keep them nimble in markets like these.
Vs. Competitors:
Texas Instruments $TXN ( ▲ 1.29% ) (debt-to-equity: 0.76) and Analog Devices $ADI ( ▲ 0.19% ) (0.19) carry much higher levels of debt, unlike Monolithic’s.
Their Z-Scores, Texas Instruments of 7.77 and Analog Devices of 4.83 lag behind Monolithic’s, showing less flexibility in a cyclical sector.
2. Intuitive Surgical $ISRG ( ▲ 0.29% )
What They Do:
Intuitive Surgical’s da Vinci system powers robotic-assisted surgeries, thriving amid aging populations and healthcare tech growth.
Why They’re Strong:
Intuitive’s Q4 2024 balance sheet shows $11.545 billion in current assets, comprised mainly of $8.832 billion in cash and short term investments, against $2.214 billion in liabilities, with no long-term debt.
Their equity-to-asset ratio (0.88) beats ~89% of medical device peers.
With 13.5% annual revenue growth over 3 years, forecasted to grow at 14.9% over the next 3 years and a 27.27% net profit margin, they’re also printing money.
Altman Z-Score:
During the past 13 years, Intuitive Surgical's highest Altman Z-Score was 52.22. The lowest was 22.52. And the median was 30.93.
The current Altman Z-Score is 49.7 which is considered very strong, even stronger than that of Monolithic Power Systems.
Sustainability:
Being cash rich and virtually debt free, Intuitive invests in AI and robotics.
Their market-leading system and recurring consumable revenue lock in cash flow, especially for the long term.
The rise in demand for healthcare, especially among baby boomers, keeps them relevant in this market.
Vs. Competitors:
Medtronic $MDT ( ▼ 0.12% ) (debt-to-equity: 0.48) and Stryker $SYK ( ▼ 0.05% ) (0.59) trail Intuitive’s by a long shot.
Their Z-Scores, Medtronic’s of 2.82 and Stryker’s of 5.22 show higher leverage, limiting their agility compared to Intuitive Surgical.
Why They Excel
Monolithic Power and Intuitive Surgical share very low levels of debt, massive amounts of cash, and high recurring profits.
Their Z-Scores scream financial health.
Their competitors’ levels of debt and lower Z-Scores highlight their weaker flexibility in this market.
The tech and healthcare markets ensure long-term growth, with both companies holding a unique edge: chip innovation and surgical dominance.
Closing Thoughts
Smart investing means backing companies that can endure market turbulence.
These 2 companies laugh off recessions with balance sheets built for growth and stability.
For everyday investors, they’re a solid foundation for lasting wealth.
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— THE DIVIDEND DOMINATOR (@TheAlphaThought)
6:55 PM • Apr 18, 2025
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