A surplus of cash can mean financial stability, but it can also indicate a reluctance (or inability) to invest in growth. Some of these companies also face challenges like stagnating revenue, declining market share, or limited scalability.
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 are two companies with net cash positions that balance growth with stability and one with hidden risks.
One Stock to Sell:
Qualys (QLYS)
Net Cash Position: $419.1 million (8.8% of Market Cap)
Originally developed to address the growing complexity of IT security in the cloud era, Qualys (NASDAQ: QLYS) provides a cloud-based platform that helps organizations identify, manage, and protect their IT assets from cyber threats across on-premises, cloud, and mobile environments.
Why Are We Cautious About QLYS?
- Customers had second thoughts about committing to its platform over the last year as its average billings growth of 9.1% underwhelmed
- Estimated sales growth of 7.7% for the next 12 months implies demand will slow from its two-year trend
- Operating margin expanded by 2.5 percentage points over the last year as it scaled and became more efficient
At $135.28 per share, Qualys trades at 6.6x forward price-to-sales. If you’re considering QLYS for your portfolio, see our FREE research report to learn more.
Two Stocks to Watch:
Nova (NVMI)
Net Cash Position: $298.4 million (2.6% of Market Cap)
Headquartered in Israel, Nova (NASDAQ: NVMI) is a provider of quality control systems used in semiconductor manufacturing.
Why Will NVMI Outperform?
- Impressive 30.8% annual revenue growth over the last two years indicates it’s winning market share this cycle
- Earnings growth has massively outpaced its peers over the last five years as its EPS has compounded at 30.9% annually
- NVMI is a free cash flow machine with the flexibility to invest in growth initiatives or return capital to shareholders
Nova’s stock price of $372.57 implies a valuation ratio of 35.6x forward P/E. Is now a good time to buy? See for yourself in our in-depth research report, it’s free.
Champion Homes (SKY)
Net Cash Position: $520.4 million (11.8% of Market Cap)
Founded in 1951, Champion Homes (NYSE: SKY) is a manufacturer of modular homes and buildings in North America.
Why Are We Positive on SKY?
- Annual revenue growth of 14.7% over the last two years was superb and indicates its market share increased during this cycle
- Performance over the past five years was turbocharged by share buybacks, which enabled its earnings per share to grow faster than its revenue
- ROIC punches in at 37.9%, illustrating management’s expertise in identifying profitable investments
Champion Homes is trading at $80.32 per share, or 24.6x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free.
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Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Comfort Systems (+1,154% between June 2020 and June 2025). Find your next big winner with StockStory today.
