A cash-heavy balance sheet is often a sign of strength, but not always. Some companies avoid debt because they have weak business models, limited expansion opportunities, or inconsistent cash flow.
Financial flexibility is valuable, but it’s not everything - at StockStory, we help you find the stocks that can not only survive but also outperform. That said, here are two companies with net cash positions that balance growth with stability and one with hidden risks.
One Stock to Sell:
NVR (NVR)
Net Cash Position: $958 million (5% of Market Cap)
Known for its unique land acquisition strategy, NVR (NYSE: NVR) is a respected homebuilder and mortgage company in the United States.
Why Should You Dump NVR?
- The company has faced growth challenges as its 4.1% annual revenue increases over the last two years fell short of other industrials companies
- Earnings per share fell by 2.8% annually over the last two years while its revenue grew, showing its incremental sales were much less profitable
- Shrinking returns on capital suggest that increasing competition is eating into the company’s profitability
NVR is trading at $6,930 per share, or 17.7x forward P/E. Check out our free in-depth research report to learn more about why NVR doesn’t pass our bar.
Two Stocks to Buy:
Lyft (LYFT)
Net Cash Position: $646.8 million (11.5% of Market Cap)
Founded by Logan Green and John Zimmer as a long-distance intercity carpooling company Zimride, Lyft (NASDAQ: LYFT) operates a ridesharing network in the US and Canada.
Why Is LYFT a Good Business?
- Active Riders have grown by 12.2% annually, allowing for more profitable cross-selling opportunities if it can build complementary products and features
- Performance over the past three years shows its incremental sales were extremely profitable, as its annual earnings per share growth of 64.1% outpaced its revenue gains
- Free cash flow margin jumped by 26.3 percentage points over the last few years, giving the company more resources to pursue growth initiatives, repurchase shares, or pay dividends
Lyft’s stock price of $14.83 implies a valuation ratio of 7.7x forward EV/EBITDA. Is now the time to initiate a position? See for yourself in our full research report, it’s free.
Sterling (STRL)
Net Cash Position: $62.41 million (0.4% of Market Cap)
Involved in the construction of a major highway, the Grand Parkway in Houston, TX, Sterling Infrastructure (NASDAQ: STRL) provides civil infrastructure construction.
Why Are We Bullish on STRL?
- Annual revenue growth of 12.4% over the last two years was superb and indicates its market share increased during this cycle
- Robust free cash flow margin of 15.2% gives it many options for capital deployment, and its growing cash flow gives it even more resources to deploy
- Rising returns on capital show management is finding more attractive investment opportunities
At $478.46 per share, Sterling trades at 35.4x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free.
High-Quality Stocks for All Market Conditions
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Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,326% between June 2020 and June 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.
