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It is often said that cash is king. This phrase has many meanings to different people. For investors, it can mean maintain a large cash balance so they have buying power ready when they find bargains in the stock market trading. Or, investors may apply the phrase as a screening tool to identify companies with large cash balances that allow the companies to take advantage of opportunities as they become available. In this article, we look at why companies with large cash balances can make good investments and we identify some companies that could be good Investment Opportunities right now.

Many investors have mixed opinions about cash. In many cases, they view cash as an undesirable asset because it has a low rate of return. Cash has always offered a low rate of return but in the current market environment, holders of cash are often losing money after inflation is considered. Even before factoring in the impact of inflation, yields on cash are near zero and not very attractive to investors.

On the other hand, cash is an asset that tends to build up when other investment options are expensive. The greatest value investor of all time, Warren Buffett, is sitting on a $90 billion pile of cash. As he recently told CNBC, “I hate cash. But it’s a holding position until you find something else.”

That attitude describes the value of cash for companies as well. Cash management policies are a very important job for companies where management and the Board of Directors are responsible for allocating cash to maximize wealth. That is really the most basic function of management at a company.

The purpose of any business is to generate cash in some way. Management must then decide how to use that cash. Management can reinvest cash in the business, use cash to pay down debt, use cash to acquire other companies or use cash to reward shareholders through dividends or share buyback programs. How well management makes that decision ultimately determines how the company and shareholders fare in the long run.

Ultimately, cash is the fuel of growth. When companies have large cash balances they may be in the best position to deliver growth in the future. This is because, as Buffet noted, cash “is a holding position until you find something else.” When they find “something else” the company can then deliver growth to investors.

Of course, large cash balances are not always a sign of financial strength. A company could have a large cash balance because it needs cash to meet crushing debt payments. In this case, the cash would be a sign of financial distress. In looking for companies that are potential investments, we eliminated this type of company and focused on those with unencumbered cash balances that could be used to buy growth.

Specifically, we screened for profitable companies which have reported positive earnings per share (EPS) in the past year and with analysts’ forecasts for continued profitability in the next year. Profits should ensure the company is looking for growth opportunities. We also screened for companies with enough cash to pay off all of their debt to ensure the company could still continue operating if all debt was repaid. We then added a value filter and limited our list of potential buys to stocks trading at a discount to their book value. Finally, we looked only at stocks trading for less than $10 a share. Low priced stocks like this can deliver large percentage gains to investors. Our search identified five investment candidates:

AirMedia Group Inc. (Nasdaq: AMCN) operates out-of-home advertising platforms and provides a network of digital TV screens on planes operated by five airlines; and gas station media network, as well as other outdoor media advertising platforms in gas stations. The company also displays non-advertising content, such as weather, sports, and comedy clips; and television programs, including documentaries and hidden camera type reality shows from other third-party content providers. In addition, the company holds concession rights to operate various traditional advertising media comprising light boxes, billboards, and display advertising; and install and operate Wi-Fi systems on trains administered by eight regional railway bureaus, as well as on long-haul buses.

AMCN has a book value of $5.68 a share with $3.56 of that amount in cash. The share price is equal to less than 60% of the cash on the company’s balance sheet.

Hornbeck Offshore Services, Inc. (NYSE: HOS) provides marine transportation, subsea installation, and accommodation support services to exploration and production, oilfield service, offshore construction, and the U.S. military customers. It operates offshore supply vessels (OSVs), multi-purpose support vessels (MPSVs), and a shore-based facility to provide logistics support and specialty services to the offshore oil and gas exploration and production industry, primarily in the U.S. Gulf of Mexico, Latin America, and internationally.

HOS is in the energy sector and investors are wary of book values in this sector. HOS has a price to book value (P/B) ratio of 0.07, indicating the stock is trading at $0.07 per $1.00 of assets. The amount of cash on the balance sheet, $5.69 per share, is more than twice the value of the stock.

Seadrill Partners LLC (NYSE: SDLP) owns, operates, and acquires offshore drilling units. The company primarily serves various oil and gas companies. As of April 20, 2017, its fleet consisted of four semi-submersible drilling rigs, four drillships, and three tender rigs.

SDLP is also in the energy sector and trades at a depressed P/B ratio of 0.26. The amount of cash on the company’s balance sheet, $8.69 per share, is also more than twice the share price.

Nomura Holdings, Inc. (NYSE: NMR) provides various financial services to individuals, corporations, financial institutions, governments, and governmental agencies worldwide. It operates through three segments: Retail, Asset Management, and Wholesale. The Retail segment offers various financial products and investment services for individuals and corporations. The Asset Management segment is involved in the development and management of investment trusts. The Wholesale segment engages in the research, sale, trading, and market-making of fixed income and equity-related products. It is also involved in underwriting various securities and other financial instruments.

NMR is trading with a P/B ratio of 0.85, less than half the investment services industry average of 2.1. The company reported a cash balance of nearly $330 billion, more than reported amount of debt which was $241 billion.

JA Solar Holdings Co., Ltd. (Nasdaq: JASO) manufactures high-performance solar power products that convert sunlight into electricity, for residential, commercial, and utility-scale power generation. The company’s principal products include monocrystalline and multicrystalline solar cells and modules. It also provides monocrystalline and multicrystalline silicon wafers; solar product processing services; and solar power plant project development and electricity generation services.

JASO is trading with a  P/B ratio of 0.36 and a cash balance of $7.84 per share which is more than the recent share price.

These companies are priced at bargain levels, trading below their book value. The cash on their books is greater than their share price which means there is limited downside risk. Cash rich balance sheets mean these stocks have the ability to reward investors by pursuing growth opportunities. As a group, these stocks offer a diversified portfolio that could deliver large gains to individual investors.