Nuvo Research (NRI:TSX.TO) (OTCPK:NRIFF) has loads of cash.

The specialty pharmaceutical maker is priced at around $6/share and has about $5/share in cash. That’s a pretty deep discount and one that has got my attention. The question is – what does Nuvo Research end up doing with that cash?

Depending on what kind of investor you are, you’ll want them to either buy back shares or make a solid investment into something that will increase earnings.

It had an allergy medicine product, MF10, that failed Phase 2 trials recently that could have been a huge catalyst in moving the company forward. They are planning another trial despite the setback.

Its most successful products, Pennsaid and Pennsaid 2%, are topical pain relievers for arthritis sufferers.

Already available in North America, Pennsaid 2% is under review for distribution into the European market. Wih approval from Europe, Pennsaid 2% could extend earnings for investors in Nuvo Research.

As an investor, the $5/share in cash and a P/E of 1.46 makes this pharmaceutical company a bargain but you have to ask yourself, “where will the growth come from?”

Hopefully management doesn’t spend the cash on R&D that leads nowhere. It could happen, which is why I’m putting this stock on the “Watch List” for now.