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.
Just because a business has cash doesn’t mean it’s a good investment. Luckily, StockStory is here to help you separate the winners from the losers. Keeping that in mind, here is one company with a net cash position that balances growth with stability and two best left off your watchlist.
Two Stocks to Sell:
PlayStudios (MYPS)
Net Cash Position: $99.12 million (58% of Market Cap)
Founded by a team of former gaming industry executives, PlayStudios (NASDAQ:MYPS) offers free-to-play digital casino games.
Why Do We Avoid MYPS?
- Products and services fail to spark excitement with consumers, as seen in its flat sales over the last two years
- Poor expense management has led to operating losses
- Incremental sales over the last four years were much less profitable as its earnings per share fell by 41.4% annually while its revenue grew
PlayStudios is trading at $1.28 per share, or 2.4x forward EV-to-EBITDA. If you’re considering MYPS for your portfolio, see our FREE research report to learn more.
Calavo (CVGW)
Net Cash Position: $19.66 million (4.1% of Market Cap)
A trailblazer in the avocado industry, Calavo Growers (NASDAQ:CVGW) is a pioneering California-based provider of high-quality avocados and other fresh food products.
Why Does CVGW Worry Us?
- Sales tumbled by 14.7% annually over the last three years, showing consumer trends are working against its favor
- Revenue base of $688.3 million puts it at a disadvantage compared to larger competitors exhibiting economies of scale
- Gross margin of 10.6% is below its competitors, leaving less money to invest in areas like marketing and production facilities
At $27.02 per share, Calavo trades at 15.8x forward P/E. Read our free research report to see why you should think twice about including CVGW in your portfolio.
One Stock to Watch:
Bill.com (BILL)
Net Cash Position: $435.7 million (9.4% of Market Cap)
Started by René Lacerte in 2006 after selling his previous payroll and accounting software company PayCycle to Intuit, Bill.com (NYSE:BILL) is a software as a service platform that aims to make payments and billing processes easier for small and medium-sized businesses.
Why Could BILL Be a Winner?
- Average billings growth of 17.6% over the last year enhances its liquidity and shows there is steady demand for its products
- Prominent and differentiated software culminates in a best-in-class gross margin of 85.1%
- Operating profits increased over the last year as the company gained some leverage on its fixed costs and became more efficient
Bill.com’s stock price of $45.25 implies a valuation ratio of 3.1x forward price-to-sales. Is now a good time to buy? Find out in our full research report, it’s free.
Stocks We Like Even More
The market surged in 2024 and reached record highs after Donald Trump’s presidential victory in November, but questions about new economic policies are adding much uncertainty for 2025.
While the crowd speculates what might happen next, we’re homing in on the companies that can succeed regardless of the political or macroeconomic environment. Put yourself in the driver’s seat and build a durable portfolio by checking out our Top 6 Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 175% over the last five years.
Stocks that made our list in 2019 include now familiar names such as Nvidia (+2,183% between December 2019 and December 2024) as well as under-the-radar businesses like Sterling Infrastructure (+1,096% five-year return). Find your next big winner with StockStory today for free.