Companies with more cash than debt can be financially resilient, but that doesn’t mean they’re all strong investments. Some lack leverage because they struggle to grow or generate consistent profits, making them unattractive borrowers.
Not all businesses with cash are winners, and that’s why we built StockStory - to help you separate the good from the bad. Keeping that in mind, here is one company with a net cash position that balances growth with stability and two with hidden risks.
Two Stocks to Sell:
Zoom (ZM)
Net Cash Position: $7.76 billion (36.6% of Market Cap)
Started by Eric Yuan who once ran engineering for Cisco’s video conferencing business, Zoom (NASDAQ: ZM) offers an easy to use, cloud-based platform for video conferencing, audio conferencing and screen sharing.
Why Are We Cautious About ZM?
- Products, pricing, or go-to-market strategy may need some adjustments as its 5% average billings growth over the last year was weak
- Platform has low switching costs as its net revenue retention rate of 98% demonstrates high turnover
- Projected sales growth of 3% for the next 12 months suggests sluggish demand
At $70.50 per share, Zoom trades at 4.5x forward price-to-sales. If you’re considering ZM for your portfolio, see our FREE research report to learn more.
Stitch Fix (SFIX)
Net Cash Position: $135 million (21.4% of Market Cap)
One of the original subscription box companies, Stitch Fix (NASDAQ: SFIX) is an online personal styling and fashion service that curates personalized clothing selections for customers.
Why Do We Think SFIX Will Underperform?
- Demand for its offerings was relatively low as its number of active clients has underwhelmed
- Poor expense management has led to operating margin losses
- Eroding returns on capital from an already low base indicate that management’s recent investments are destroying value
Stitch Fix’s stock price of $4.84 implies a valuation ratio of 13.5x forward EV-to-EBITDA. Dive into our free research report to see why there are better opportunities than SFIX.
One Stock to Buy:
Powell (POWL)
Net Cash Position: $432.4 million (13.3% of Market Cap)
Originally a metal-working shop supporting local petrochemical facilities, Powell (NYSE: POWL) has grown from a small Houston manufacturer to a global provider of electrical systems.
Why Is POWL a Good Business?
- Annual revenue growth of 28.7% over the past two years was outstanding, reflecting market share gains this cycle
- Incremental sales significantly boosted profitability as its annual earnings per share growth of 124% over the last two years outstripped its revenue performance
- Free cash flow margin grew by 12.8 percentage points over the last five years, giving the company more chips to play with
Powell is trading at $270.15 per share, or 18.4x forward P/E. Is now a good time to buy? See for yourself in our comprehensive research report, it’s free.
High-Quality Stocks for All Market Conditions
When Trump unveiled his aggressive tariff plan in April 2025, markets tanked as investors feared a full-blown trade war. But those who panicked and sold missed the subsequent rebound that’s already erased most losses.
Don’t let fear keep you from great opportunities and take a look at Top 9 Market-Beating Stocks. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-micro-cap company Kadant (+351% five-year return). Find your next big winner with StockStory today for free. Find your next big winner with StockStory today. Find your next big winner with StockStory today
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