Investor Fears of 'Zombies' Create Bubble in Companies With High Cash Flow
- Piper Sandler spots big concentration in well-funded companies
- Trade has ‘room to run’ as high capital costs cull non-earners
Investors are shunning zombie companies that survived for years because of low interest rates.
Photographer: Andrew Harrer/BloombergThis article is for subscribers only.
Companies with healthy balance sheets are some of the best performing stocks this year, and their shares could keep rising, according to Piper Sandler & Co. strategists led by Michael Kantrowitz.
Investors are shunning zombie companies that survived for years because of low interest rates. Macroeconomic uncertainty has instead driven US equity investors toward the firms readily able to pay their interest expenses with earnings, known as having high interest-coverage ratios.