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 is one company with a net cash position that can leverage its balance sheet to grow and two that may struggle.
Two Stocks to Sell:
Marcus & Millichap (MMI)
Net Cash Position: $179.9 million (18.4% of Market Cap)
Founded in 1971, Marcus & Millichap (NYSE: MMI) specializes in commercial real estate investment sales, financing, research, and advisory services.
Why Is MMI Risky?
- Annual revenue growth of 1% over the last five years was below our standards for the consumer discretionary sector
- Low free cash flow margin of 5% for the last two years gives it little breathing room, constraining its ability to self-fund growth or return capital to shareholders
- Eroding returns on capital from an already low base indicate that management’s recent investments are destroying value
At $25.66 per share, Marcus & Millichap trades at 38.2x forward P/E. To fully understand why you should be careful with MMI, check out our full research report (it’s free).
West Pharmaceutical Services (WST)
Net Cash Position: $470.2 million (2.7% of Market Cap)
Founded in 1923 and serving as a critical link in the pharmaceutical supply chain, West Pharmaceutical Services (NYSE: WST) manufactures specialized packaging, containment systems, and delivery devices for injectable drugs and healthcare products.
Why Does WST Worry Us?
- Muted 2.1% annual revenue growth over the last two years shows its demand lagged behind its healthcare peers
- Efficiency has decreased over the last five years as its adjusted operating margin fell by 6.7 percentage points
- Diminishing returns on capital suggest its earlier profit pools are drying up
West Pharmaceutical Services is trading at $234.68 per share, or 29.9x forward P/E. If you’re considering WST for your portfolio, see our FREE research report to learn more.
One Stock to Watch:
Toast (TOST)
Net Cash Position: $1.96 billion (12.2% of Market Cap)
Born from the frustrations of three friends waiting too long for their restaurant bill, Toast (NYSE: TOST) provides a cloud-based digital technology platform with software, payment processing, and hardware solutions built specifically for restaurants.
Why Could TOST Be a Winner?
- ARR growth averaged 29.4% over the last year, showing customers are willing to take multi-year bets on its software
- Sales outlook for the upcoming 12 months implies the business will stay on its desirable two-year growth trajectory
Toast’s stock price of $27.40 implies a valuation ratio of 2.3x forward price-to-sales. Is now the time to initiate a position? Find out in our full research report, it’s free.
Stocks We Like Even More
WHILE YOU’RE HERE: Top 9 Market-Beating Stocks. The best stocks don't just beat the market once. They do it again. And again. Robust revenue growth, rising free cash flow, returns on capital that leave their competition in the dust. The market has already rewarded these businesses.
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Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,326% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Kadant (+351% five-year return). Find your next big winner with StockStory today.
