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Andrew T. Gillies is Director of Communications at the Center for Audit Quality, an affiliate of the American Institute of CPAs, in Washington, DC. Based in Washington since 2002, he has also worked in editorial and communications roles at the Investment Company Institute, the World Bank, Forbes, and Vault.com. His policy-themed writing has focused on aerospace and defense, energy and environment, transportation, and financial services.

Monday, December 18, 2000

Stock Focus: Companies With Low Debt

NEW YORK - "Debt is a fixed expense," explains David Elias, president and chief investment officer at Elias Asset Management, "so when revenues take a hit, you've got a problem." This also means that companies without a heavy debt burden are better prepared to ride out a business slowdown.

Some industries, despite their great need for new plants and equipment, typically do not carry a lot of debt. The best example is semiconductors. Intel's (nasdaq: INTC - news - people) debt to equity is only 2%. "The capital intensity and unpredictability of the semiconductor business has typically argued against debt financing," says Richard Whittington, semiconductor analyst at Banc of America Securities. Whittington notes that the big chipmakers have little trouble raising money in the equity markets.

Full story at Forbes.com