A cash-heavy balance sheet is often a sign of strength, but not always. Some companies avoid debt because they have weak business models, limited expansion opportunities, or inconsistent cash flow.
Just because a business has cash doesn’t mean it’s a good investment. Luckily, StockStory is here to help you separate the winners from the losers. Keeping that in mind, here is one company with a net cash position that can continue growing sustainably and two best left off your watchlist.
Two Stocks to Sell:
Lennar (LEN)
Net Cash Position: $849.8 million (2.4% of Market Cap)
One of the largest homebuilders in America, Lennar (NYSE: LEN) is known for constructing affordable, move-up, and retirement homes across a range of markets and communities.
Why Should You Dump LEN?
- Backlog has dropped by 20.4% on average over the past two years, suggesting it’s losing orders as competition picks up
- Incremental sales over the last two years were much less profitable as its earnings per share fell by 11.4% annually while its revenue grew
- 13.5 percentage point decline in its free cash flow margin over the last five years reflects the company’s increased investments to defend its market position
Lennar is trading at $138.55 per share, or 13x forward P/E. Dive into our free research report to see why there are better opportunities than LEN.
T. Rowe Price (TROW)
Net Cash Position: $2.79 billion (11.4% of Market Cap)
Founded in 1937 by Thomas Rowe Price Jr., who pioneered the growth stock investing approach, T. Rowe Price (NASDAQ: TROW) is an investment management firm that offers mutual funds, advisory services, and retirement planning solutions to individuals and institutions.
Why Do We Think Twice About TROW?
- Sales trends were unexciting over the last five years as its 4.3% annual growth was below the typical financials company
- Annual earnings per share growth of 2.8% underperformed its revenue over the last five years, showing its incremental sales were less profitable
T. Rowe Price’s stock price of $111.48 implies a valuation ratio of 13.7x forward P/E. Check out our free in-depth research report to learn more about why TROW doesn’t pass our bar.
One Stock to Watch:
Grand Canyon Education (LOPE)
Net Cash Position: $266.1 million (4.7% of Market Cap)
Founded in 1949, Grand Canyon Education (NASDAQ: LOPE) is an educational services provider known for its operation at Grand Canyon University.
Why Could LOPE Be a Winner?
- Disciplined cost controls and effective management resulted in a strong two-year operating margin of 26.8%
- Industry-leading 31.8% return on capital demonstrates management’s skill in finding high-return investments, and its rising returns show it’s making even more lucrative bets
- Rising returns on capital show management is finding more attractive investment opportunities
At $207.60 per share, Grand Canyon Education trades at 22.4x forward P/E. Is now the right time to buy? See for yourself in our comprehensive research report, it’s free.
Stocks We Like Even More
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-small-cap company Comfort Systems (+782% 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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