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.
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 can leverage their balance sheets to grow and one with hidden risks.
One Stock to Sell:
Lincoln Financial Group (LNC)
Net Cash Position: $1.38 billion (17.5% of Market Cap)
Founded in 1905 by a group of Fort Wayne, Indiana businessmen who named the company after Abraham Lincoln, Lincoln National Corporation (NYSE: LNC) provides insurance, retirement plans, and wealth management products through its subsidiaries, operating under four main segments: Annuities, Life Insurance, Group Protection, and Retirement Plan Services.
Why Are We Out on LNC?
- Products and services are facing end-market challenges during this cycle, as seen in its flat sales over the last five years
- Net premiums earned remained stagnant over the last two years, indicating expansion challenges this cycle
- Annual book value per share declines of 15.9% for the past five years show its capital management struggled during this cycle
At $41.55 per share, Lincoln Financial Group trades at 0.9x forward P/B. Read our free research report to see why you should think twice about including LNC in your portfolio.
Two Stocks to Buy:
Costco (COST)
Net Cash Position: $6.67 billion (1.6% of Market Cap)
Designed to be a one-stop shop for the suburban consumer, Costco (NASDAQ: COST) is a membership-only retail chain that sells groceries, apparel, toys, and household items, often in bulk quantities.
Why Is COST a Good Business?
- Brick-and-mortar locations are witnessing elevated demand as their same-store sales growth averaged 5% over the past two years
- Enormous revenue base of $268.8 billion compensates for its low gross margin and provides significant leverage in supplier negotiations
- Stellar returns on capital showcase management’s ability to surface highly profitable business ventures
Costco is trading at $957.56 per share, or 49.2x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free.
Live Oak Bancshares (LOB)
Net Cash Position: $555.3 million (33.1% of Market Cap)
Founded during the 2008 financial crisis with a vision to reimagine small business banking through technology, Live Oak Bancshares (NYSE: LOB) is a bank holding company that specializes in providing online banking services and SBA-guaranteed loans to small businesses across targeted industries nationwide.
Why Are We Backing LOB?
- Annual net interest income growth of 20.9% over the past five years was outstanding, reflecting market share gains this cycle
- Performance over the past five years shows its incremental sales were extremely profitable, as its annual earnings per share growth of 51.2% outpaced its revenue gains
- Impressive 11.4% annual tangible book value per share growth over the last five years indicates it’s building equity value this cycle
Live Oak Bancshares’s stock price of $36.71 implies a valuation ratio of 1.5x forward P/B. Is now a good time to buy? See for yourself in our full research report, it’s free.
High-Quality Stocks for All Market Conditions
Donald Trump’s April 2025 "Liberation Day" tariffs sent markets into a tailspin, but stocks have since rebounded strongly, proving that knee-jerk reactions often create the best buying opportunities.
The smart money is already positioning for the next leg up. Don’t miss out on the recovery - check out our 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-small-cap company Exlservice (+354% 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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