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.
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. Keeping that in mind, here are two companies with net cash positions that balance growth with stability and one that may struggle.
One Stock to Sell:
National Bank Holdings (NBHC)
Net Cash Position: $26.69 million (1.4% of Market Cap)
Operating under familiar local brands like Community Banks of Colorado, Bank Midwest, and Bank of Jackson Hole, National Bank Holdings (NYSE: NBHC) operates regional banks across Colorado, Kansas, Missouri, Wyoming, Texas, and other western states, offering commercial, business, and consumer banking services.
Why Are We Hesitant About NBHC?
- Annual revenue growth of 6.1% over the last two years was below our standards for the banking sector
- Performance over the past five years shows its incremental sales were much less profitable, as its earnings per share fell by 2.5% annually
- 1.8% annual tangible book value per share growth over the last five years was slower than its banking peers
At $41.77 per share, National Bank Holdings trades at 1.1x forward P/B. Dive into our free research report to see why there are better opportunities than NBHC.
Two Stocks to Watch:
Napco (NSSC)
Net Cash Position: $119.7 million (8.9% of Market Cap)
Protecting everything from schools to government facilities since 1969, Napco Security Technologies (NASDAQ: NSSC) manufactures electronic security devices, access control systems, and communication services for intrusion and fire alarm systems.
Why Do We Love NSSC?
- Market share has increased this cycle as its 14.2% annual revenue growth over the last five years was exceptional
- NSSC is a free cash flow machine with the flexibility to invest in growth initiatives or return capital to shareholders, and its growing cash flow gives it even more resources to deploy
- Rising returns on capital show management is finding more attractive investment opportunities
Napco is trading at $37.80 per share, or 24.1x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free.
Mercury General (MCY)
Net Cash Position: $1.48 billion (25.7% of Market Cap)
Founded in 1961 and maintaining a network of over 6,300 independent agents across the country, Mercury General (NYSE: MCY) is an insurance company that primarily sells automobile insurance policies through independent agents in 11 states, with a strong focus on California.
Why Are We Positive on MCY?
- Market penetration was impressive this cycle as its net premiums earned expanded by 11.9% annually over the last two years
- Incremental sales over the last two years have been highly profitable as its earnings per share increased by 87% annually, topping its revenue gains
- Annual book value per share growth of 31.1% over the last two years was superb and indicates its capital strength increased during this cycle
Mercury General’s stock price of $104.31 implies a valuation ratio of 1.9x forward P/B. Is now the time to initiate a position? See for yourself 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.
