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. That said, here is one company with a net cash position that balances growth with stability and two with hidden risks.
Two Stocks to Sell:
Keysight (KEYS)
Net Cash Position: $55 million (0.2% of Market Cap)
Spun off from Hewlett-Packard in 2014, Keysight (NYSE: KEYS) offers electronic measurement products for use in various sectors.
Why Does KEYS Give Us Pause?
- Sales pipeline suggests its future revenue growth won’t meet our standards as its backlog averaged 1.9% declines over the past two years
- Falling earnings per share over the last two years has some investors worried as stock prices ultimately follow EPS over the long term
- Shrinking returns on capital suggest that increasing competition is eating into the company’s profitability
At $179.08 per share, Keysight trades at 23.8x forward P/E. If you’re considering KEYS for your portfolio, see our FREE research report to learn more.
Penumbra (PEN)
Net Cash Position: $253.3 million (2.3% of Market Cap)
Founded in 2004 to address challenging medical conditions with significant unmet needs, Penumbra (NYSE: PEN) develops and manufactures innovative medical devices for treating vascular diseases and providing immersive healthcare rehabilitation solutions.
Why Are We Hesitant About PEN?
- Modest revenue base of $1.33 billion gives it less fixed cost leverage and fewer distribution channels than larger companies
- Low free cash flow margin of 4.8% for the last five years gives it little breathing room, constraining its ability to self-fund growth or return capital to shareholders
- Low returns on capital reflect management’s struggle to allocate funds effectively
Penumbra is trading at $280.20 per share, or 59.3x forward P/E. To fully understand why you should be careful with PEN, check out our full research report (it’s free for active Edge members).
One Stock to Watch:
agilon health (AGL)
Net Cash Position: $240.9 million (101% of Market Cap)
Transforming how doctors care for seniors by shifting financial incentives from volume to outcomes, agilon health (NYSE: AGL) provides a platform that helps primary care physicians transition to value-based care models for Medicare patients through long-term partnerships and global capitation arrangements.
Why Are We Fans of AGL?
- Annual revenue growth of 37.2% over the past five years was outstanding, reflecting market share gains this cycle
- Customer growth averaged 23% over the past two years, showing its ability to "land" new contracts and potentially "expand" them later - a powerful one-two punch for sales
- Negative free cash flow margin has improved over the last five years, showing the company is one step closer to financial self-sufficiency
agilon health’s stock price of $0.58 implies a valuation ratio of 0x forward price-to-sales. Is now a good time to buy? Find out in our full research report, it’s free for active Edge members.
Stocks We Like Even More
Your portfolio can’t afford to be based on yesterday’s story. The risk in a handful of heavily crowded stocks is rising daily.
The names generating the next wave of massive growth are right here in 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 244% over the last five years (as of June 30, 2025).
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 for free. Find your next big winner with StockStory today. Find your next big winner with StockStory today
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