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.
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 are two companies with net cash positions that balance growth with stability and one that may struggle.
One Stock to Sell:
Medifast (MED)
Net Cash Position: $150 million (107% of Market Cap)
Known for its Optavia program that combines portion-controlled meal replacements with coaching, Medifast (NYSE: MED) has a broad product portfolio of bars, snacks, drinks, and desserts for those looking to lose weight or consume healthier foods.
Why Do We Pass on MED?
- Annual revenue declines of 30.3% over the last three years indicate problems with its market positioning
- Overall productivity fell over the last year as its plummeting sales were accompanied by a decline in its operating margin
- Falling earnings per share over the last three years has some investors worried as stock prices ultimately follow EPS over the long term
At $13.13 per share, Medifast trades at 0.4x forward price-to-sales. If you’re considering MED for your portfolio, see our FREE research report to learn more.
Two Stocks to Watch:
Zscaler (ZS)
Net Cash Position: $1.78 billion (3.7% of Market Cap)
After successfully selling all four of his previous cybersecurity companies, Jay Chaudhry's fifth venture, Zscaler (NASDAQ: ZS) offers software-as-a-service that helps companies securely connect to applications and networks in the cloud.
Why Are We Positive On ZS?
- ARR growth averaged 24.4% over the last year, showing customers are willing to take multi-year bets on its offerings
- Forecasted revenue growth of 19.9% for the next 12 months indicates its momentum over the last three years is sustainable
- Impressive free cash flow profitability enables the company to fund new investments or reward investors with share buybacks/dividends
Zscaler’s stock price of $304 implies a valuation ratio of 15.5x forward price-to-sales. Is now a good time to buy? See for yourself in our comprehensive research report, it’s free.
Shopify (SHOP)
Net Cash Position: $4.38 billion (3.1% of Market Cap)
Originally created as an internal tool for a snowboarding company, Shopify (NYSE: SHOP) provides a software platform for building and operating e-commerce businesses.
Why Do We Love SHOP?
- Payment activity on its platform is soaring as its TPV growth averaged 31.7% over the last year, enabling the company to collect more fees and upsell additional services like banking
- Fast payback periods on sales and marketing expenses allow the company to invest heavily and onboard many customers concurrently
- Operating margin expanded by 28.1 percentage points over the last year as it scaled and became more efficient
Shopify is trading at $107.23 per share, or 12.4x forward price-to-sales. Is now the time to initiate a position? Find out in our full 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 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 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
