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.
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 is one company with a net cash position that balances growth with stability and two with hidden risks.
Two Stocks to Sell:
Vimeo (VMEO)
Net Cash Position: $286.2 million (40.3% of Market Cap)
Originally launched in 2004 as a platform for filmmakers seeking a high-quality alternative to YouTube, Vimeo (NASDAQ: VMEO) provides cloud-based video creation, editing, hosting, and distribution software that helps businesses and creators make, manage, and share professional-quality videos.
Why Are We Hesitant About VMEO?
- Customers postponed purchases of its products and services this cycle as its revenue declined by 1.5% annually over the last two years
- Modest revenue base of $415.1 million gives it less fixed cost leverage and fewer distribution channels than larger companies
- Negative returns on capital show management lost money while trying to expand the business
At $4.50 per share, Vimeo trades at 23.6x forward EV-to-EBITDA. To fully understand why you should be careful with VMEO, check out our full research report (it’s free).
Pacific Premier Bancorp (PPBI)
Net Cash Position: $427.6 million (20.7% of Market Cap)
With a specialized division that serves homeowners' associations nationwide and a trust division that handles self-directed IRAs with alternative assets, Pacific Premier Bancorp (NASDAQ: PPBI) is a Western US regional bank that provides banking services to small and middle-market businesses, corporations, non-profits, and specialty markets.
Why Are We Out on PPBI?
- Loans are facing significant end-market challenges during this cycle as net interest income has declined by 4.8% annually over the last four years
- Efficiency ratio improvement of 15.4 percentage points over the last four years demonstrates its ability to scale effectively
- Earnings per share fell by 8.6% annually over the last five years while its revenue grew, showing its incremental sales were much less profitable
Pacific Premier Bancorp is trading at $21.27 per share, or 0.7x forward P/B. Check out our free in-depth research report to learn more about why PPBI doesn’t pass our bar.
One Stock to Watch:
Fiverr (FVRR)
Net Cash Position: $330.4 million (30.8% of Market Cap)
Based in Tel Aviv, Fiverr (NYSE: FVRR) operates a fixed price global freelance marketplace for digital services.
Why Are We Positive On FVRR?
- 17.4% annual increases in its average revenue per buyer over the last two years show its platform is resonating with power users
- Performance over the past three years shows its incremental sales were extremely profitable, as its annual earnings per share growth of 52.1% outpaced its revenue gains
- Free cash flow margin expanded by 9.7 percentage points over the last few years, providing additional flexibility for investments and share buybacks/dividends
Fiverr’s stock price of $30.35 implies a valuation ratio of 12.7x forward EV/EBITDA. Is now the time to initiate a position? See for yourself in our full research report, it’s free.
High-Quality Stocks for All Market Conditions
Market indices reached historic highs following Donald Trump’s presidential victory in November 2024, but the outlook for 2025 is clouded by new trade policies that could impact business confidence and growth.
While this has caused many investors to adopt a "fearful" wait-and-see approach, we’re leaning into our best ideas that can grow regardless of the political or macroeconomic climate. Take advantage of Mr. Market by checking out our Top 5 Growth Stocks for this month. 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.
