Shares of Cisco Systems (Nasdaq: CSCO) are finally beginning to percolate, thanks to solid quarterly results and a brightening outlook. A 10% upward move since early March is quite impressive when you consider the beating that many tech stocks have been getting in recent months.#-ad_banner-#

Though Cisco is only slowly going to emerge from an extended period of anemic sales growth, it has a powerful weapon in today’s troubled tech stock environment…

Cash. Lots of it.

Cisco ended its fiscal third quarter with nearly $30 billion in net cash — but it’s having a hard time spending that cash.

It now spends nearly $1 billion every quarter on its dividend, and the share count has shrunk from 6.6 billion shares back in fiscal 2005 to a recent 5.2 billion. And still, the cash balance remains enormous.

Those buybacks and dividends have helped Cisco’s shareholders sleep well at night, even as they’ve had to endure an extended period of shares trading in the low $20s. With the Nasdaq index steadily losing traction, having a rock-solid balance sheet is quite a virtue — and can help shares from getting sucked down into a deeper sell-off.

Cisco’s not alone. I’ve come across 15 tech stocks that have net cash equaling or exceeding 25% of their entire market value.

To be sure, lots of cash in relation to your market value can be a sign that investors don’t see much value in your business. The fact that the core business of RealNetworks (Nasdaq: RNWK) is assigned little value reflects the fact that sales have fallen at a 20% annual pace for four straight years.

But cash-rich Digital River (Nasdaq: DRIV), which has seen its shares fall by half over the past five years, is showing signs of renewal. The company, which provides e-commerce software, just exceeded its own revenue guidance, and appears poised for stronger results in coming quarters after a recent business overhaul.

The key is to see what these companies do with their cash balances. Zynga’s (Nasdaq: ZNGA) $1.2 billion cash hoard may look impressive — until you realize that the company has blown through $600 million in cash over the past three years in a futile attempt to launch hot new gaming titles.

One of my favorite current cash-rich plays is Veeco Instruments (Nasdaq: VECO), a provider of LED manufacturing equipment. The company announced an impressive spike in sales in the first quarter, and analysts at UBS think “the LED equipment industry is in the early stages of a recovery as LED chip customer utilization rates are over 90% and customers need to add capacity.” UBS’ $48 price target represents 50% upside.

Veeco has modestly reduced its share count in each of the past three years, but in light of the bulletproof balance sheet and improving industry conditions, the time is right for much more aggressive share buybacks.

You might wonder: How do these companies end up with such large cash balances, anyway? Often times, through impressive cash generation.

Chip maker IXYS Corp. (Nasdaq: IXYS), for example, has generated positive free cash flow in eight of the past nine years. IXYS is expected to report fiscal fourth-quarter results in early June, and you can expect that sturdy cash balance to have grown even more. Analysts expect sales to grow at a double-digit pace in the fiscal year that began last month, with EPS on track to more than double to $0.85. 

You’ll also find a solid group of companies outside of the tech sector that have considerable net cash balances.

A few quick notes about this group:

• Medallion Financial (Nasdaq: TAXI), with its impressive 6.9% dividend yield, is favored by my colleague Nathan Slaughter, who holds TAXI in his High-Yield Investing real-money portfolio.

• General Motors’ (NYSE: GM) net cash balance of $16 billion is quite impressive, but know that some of those funds will go to the company’s pension plan. 

• SINA Corp. (Nasdaq: SINA) recently announced a massive share buyback. 

• Both Safeguard Scientifics (NYSE: SFE) and ICG Group (Nasdaq: ICGE) are venture capital firms, and many of their investments are carried at cost, below likely current valuations, meaning that these firms’ balance sheets are even stronger than they appear.

Risks to Consider: Cash is often frittered away on dubious acquisitions, so these companies must use their cash judiciously. The key for these stocks is to focus only on those firms that are generating positive cash flow, which puts them in a better position to pursue buybacks or increase dividends.

Action to Take –> The Nasdaq index, home to many tech stocks, has already posted more one-day drops of 1% or more than it did in all of 2013. The waters have become suddenly become much harder to navigate. Focusing on stocks with massive amounts of net cash can provide a great measure of safety in choppy markets. 

P.S. My colleague Nathan Slaughter has recently discovered a high-yield income investment that allows regular investors to benefit from real estate the same way America’s wealthy elite do. These “Eisenhower Trusts,” as he calls them, allow anyone to invest in real estate and earn yields of 12% or higher — and it takes no more than $500 to get started. To learn more about this special asset class, I urge you to check out his latest report here.