A surplus of cash can mean financial stability, but it can also indicate a reluctance (or inability) to invest in growth. Some of these companies also face challenges like stagnating revenue, declining market share, or limited scalability.
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 continue growing sustainably and two that may struggle.
Two Stocks to Sell:
Ruger (RGR)
Net Cash Position: $106.1 million (17.9% of Market Cap)
Founded in 1949, Ruger (NYSE: RGR) is an American manufacturer of firearms for the commercial sporting market.
Why Do We Steer Clear of RGR?
- Products and services aren't resonating with the market as its revenue declined by 3.9% annually over the last two years
- Falling earnings per share over the last four 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 $36.03 per share, Ruger trades at 11.1x forward EV-to-EBITDA. Dive into our free research report to see why there are better opportunities than RGR.
SoundHound AI (SOUN)
Net Cash Position: $241.2 million (6.3% of Market Cap)
Founded in 2005, SoundHound AI (NASDAQ: SOUN) develops independent voice artificial intelligence solutions that enable businesses across various industries to offer customized conversational experiences to consumers.
Why Do We Think Twice About SOUN?
- Bad unit economics and steep infrastructure costs are reflected in its gross margin of 44.1%, one of the worst among software companies
- Operating margin declined by 39 percentage points over the last year as it scaled
- Negative free cash flow raises questions about the return timeline for its investments
SoundHound AI is trading at $9.67 per share, or 25.3x forward price-to-sales. Check out our free in-depth research report to learn more about why SOUN doesn’t pass our bar.
One Stock to Buy:
Monster (MNST)
Net Cash Position: $1.70 billion (2.8% of Market Cap)
Founded in 2002 as a natural soda and juice company, Monster Beverage (NASDAQ: MNST) is a pioneer of the energy drink category, and its Monster Energy brand targets a young, active demographic.
Why Is MNST a Top Pick?
- Disciplined cost controls and effective management resulted in a strong two-year operating margin of 27.3%
- Strong free cash flow margin of 22% enables it to reinvest or return capital consistently, and its improved cash conversion implies it’s becoming a less capital-intensive business
- Stellar returns on capital showcase management’s ability to surface highly profitable business ventures
Monster’s stock price of $62.33 implies a valuation ratio of 33.5x forward P/E. Is now the time to initiate a position? See for yourself in our in-depth research report, it’s free.
High-Quality Stocks for All Market Conditions
The market surged in 2024 and reached record highs after Donald Trump’s presidential victory in November, but questions about new economic policies are adding much uncertainty for 2025.
While the crowd speculates what might happen next, we’re homing in on the companies that can succeed regardless of the political or macroeconomic environment. Put yourself in the driver’s seat and build a durable portfolio by checking 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 176% over the last five years.
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.
