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 can continue growing sustainably and one with hidden risks.
One Stock to Sell:
Stellar Bancorp (STEL)
Net Cash Position: $416.6 million (25.9% of Market Cap)
Created through strategic mergers to serve the growing Texas business community, Stellar Bancorp (NYSE: STEL) is a Texas bank holding company that provides commercial banking services primarily to small and medium-sized businesses and professionals.
Why Are We Out on STEL?
- Flat sales over the last two years suggest it must find different ways to grow during this cycle
- Projected 5.7 percentage point efficiency ratio increase over the next year signals its day-to-day expenses will rise
- Tangible book value per share tumbled by 3.7% annually over the last five years, showing banking sector trends are working against its favor during this cycle
Stellar Bancorp is trading at $31.30 per share, or 1x forward P/B. Read our free research report to see why you should think twice about including STEL in your portfolio.
Two Stocks to Watch:
Instacart (CART)
Net Cash Position: $1.56 billion (12.6% of Market Cap)
Powering more than one billion grocery orders since its founding, Instacart (NASDAQ: CART) is an online grocery shopping and delivery platform that partners with retailers to help customers shop from local stores through its app or website.
Why Should You Buy CART?
- Annual revenue growth of 19.5% over the last three years was superb and indicates its market share is rising
- Performance over the past three years shows its incremental sales were extremely profitable, as its annual earnings per share growth of 40.3% outpaced its revenue gains
- Free cash flow margin jumped by 23.9 percentage points over the last few years, giving the company more resources to pursue growth initiatives, repurchase shares, or pay dividends
Instacart’s stock price of $47.01 implies a valuation ratio of 12.1x forward EV/EBITDA. Is now the right time to buy? See for yourself in our in-depth research report, it’s free.
Moelis (MC)
Net Cash Position: $194.6 million (3.6% of Market Cap)
Founded in 2007 by veteran banker Ken Moelis during the lead-up to the financial crisis, Moelis & Company (NYSE: MC) is an independent investment bank that provides strategic and financial advisory services to corporations, financial sponsors, governments, and sovereign wealth funds.
Why Do We Watch MC?
- Annual revenue growth of 31.7% over the past two years was outstanding, reflecting market share gains this cycle
- Incremental sales significantly boosted profitability as its annual earnings per share growth of 86.4% over the last two years outstripped its revenue performance
- Industry-leading 45% return on equity demonstrates management’s skill in finding high-return investments
At $73.29 per share, Moelis trades at 28.8x 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
Trump’s April 2025 tariff bombshell triggered a massive market selloff, but stocks have since staged an impressive recovery, leaving those who panic sold on the sidelines.
Take advantage of the rebound by checking 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-micro-cap company Tecnoglass (+1,754% 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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