The software giant that generates more than $1 billion in cash flow each month, has bought back large amounts of its own stock and has an AAA debt rating. Its wealth of cash for research and development makes it one of the few firms with the technology and financial resources to invest heavily in cloud computing, the emerging field in which hosted services are delivered on-demand over the Internet.

Nike Inc. (NKE)

The world's largest athletic footwear and apparel maker, enjoys an enormous cash cushion and is committed to returning cash to its shareholders. That strategy includes $5 billion in planned share repurchases over the next five years and ongoing dividend growth. Steady cash flow can also be used for acquisitions.

(MCD)

The fast-food powerhouse, has a massive cash flow and substantial cash cushion because it receives franchisee royalties and rent payments even when the economy is doing poorly. It boasts a three-decade history of paying cash dividends and repurchasing shares.

"Put yourself in the place of the CEO, whose mandate it is to protect shareholders," said Kelley Wright, managing editor of Investment Quality Trends newsletter in Carlsbad, Calif. "If the CEO thinks hoarding cash is good because of uncertainty about what's next in the economy, then that is what will be done."

Not that it is always a good thing. Having a lot of cash can sometimes mean that money isn't being spent where it should be to improve the overall business. We are exiting the period in which cost-cutting was revered for cost-cutting's sake alone. The reality is that firms can't really grow by cutting back.

"Look at where a company's cash is coming from -- whether it is from sales and it is just booking the cash, or whether it is selling assets or closing plants," added Wright. "You don't want to see all that cash coming from shrinking its business."

"A company having a large cash reserve may mean it is a mature company with growth prospects that aren't as good as they once were," cautioned Steven Goldman, senior market strategist with Weeden & Co. in Greenwich, Conn. "Those types of stocks will do especially well in a defensive environment."

"Companies will definitely be more confident in 2011 than they were last summer, which had all those euro troubles," concluded Goldman. "However, they still remember what went on in the financial crisis and continue to allocate cash to the unforeseen economic and systematic risks that these days seem to be more prevalent than ever before."

Available at Amazon.com: