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.
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. Keeping that in mind, here is one company with a net cash position that can leverage its balance sheet to grow and two best left off your watchlist.
Two Stocks to Sell:
Connection (CNXN)
Net Cash Position: $343.5 million (22.1% of Market Cap)
Starting as a small computer products seller in 1982 and evolving into a Fortune 1000 company, Connection (NASDAQ: CNXN) is a technology solutions provider that helps businesses and government agencies design, purchase, implement, and manage their IT infrastructure and systems.
Why Do We Avoid CNXN?
- Sales tumbled by 1.3% annually over the last two years, showing market trends are working against its favor during this cycle
- Earnings growth underperformed the sector average over the last two years as its EPS grew by just 6.1% annually
- Ability to fund investments or reward shareholders with increased buybacks or dividends is restricted by its weak free cash flow margin of 2.3% for the last five years
Connection’s stock price of $61.13 implies a valuation ratio of 16.9x forward P/E. If you’re considering CNXN for your portfolio, see our FREE research report to learn more.
DigitalBridge (DBRG)
Net Cash Position: $42.71 million (2% of Market Cap)
Transforming from a traditional real estate investor to a digital-focused powerhouse in 2021, DigitalBridge Group (NYSE: DBRG) is a global digital infrastructure investment firm that manages capital and operates assets across data centers, cell towers, fiber networks, and edge infrastructure.
Why Are We Cautious About DBRG?
- Annual sales declines of 21.7% for the past five years show its products and services struggled to connect with the market during this cycle
- ROE of 1.3% reflects management’s challenges in identifying attractive investment opportunities
At $12 per share, DigitalBridge trades at 1.2x forward P/E. Check out our free in-depth research report to learn more about why DBRG doesn’t pass our bar.
One Stock to Buy:
Doximity (DOCS)
Net Cash Position: $829.1 million (6% of Market Cap)
With over 80% of U.S. physicians as members of its digital community, Doximity (NYSE: DOCS) operates a digital platform that enables physicians and other healthcare professionals to collaborate, stay current with medical news, manage their careers, and conduct virtual patient visits.
Why Will DOCS Outperform?
- Billings growth has averaged 19.8% over the last year, indicating a healthy pipeline of new contracts that should drive future revenue increases
- Software platform has product-market fit given the rapid recovery of its customer acquisition costs
- Impressive free cash flow profitability enables the company to fund new investments or reward investors with share buybacks/dividends
Doximity is trading at $73.26 per share, or 22.8x forward price-to-sales. Is now the right time to buy? Find out in our full research report, it’s free for active Edge members.
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 5 Strong Momentum Stocks for this week. 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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