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 balances growth with stability and two best left off your watchlist.
Two Stocks to Sell:
Sonos (SONO)
Net Cash Position: $160.5 million (13.5% of Market Cap)
A pioneer in connected home audio systems, Sonos (NASDAQ: SONO) offers a range of premium wireless speakers and sound systems.
Why Should You Sell SONO?
- Sales tumbled by 6.3% annually over the last two years, showing consumer trends are working against its favor
- Suboptimal cost structure is highlighted by its history of operating margin losses
- Negative returns on capital show management lost money while trying to expand the business
Sonos’s stock price of $9.93 implies a valuation ratio of 47.3x forward P/E. Dive into our free research report to see why there are better opportunities than SONO.
Bank of Hawaii (BOH)
Net Cash Position: $102.4 million (3.9% of Market Cap)
Founded in 1897 as a financial anchor for the newly annexed Hawaiian territory, Bank of Hawaii (NYSE: BOH) is a financial institution providing banking, investment, and insurance services primarily to customers in Hawaii, Guam, and other Pacific Islands.
Why Are We Wary of BOH?
- Net interest income was flat over the last four years, indicating it’s failed to expand this cycle
- Net interest margin of 2.2% reflects its high servicing and capital costs
- Sales over the last five years were less profitable as its earnings per share fell by 6.8% annually while its revenue was flat
At $65.22 per share, Bank of Hawaii trades at 1.8x forward P/B. Check out our free in-depth research report to learn more about why BOH doesn’t pass our bar.
One Stock to Watch:
LegalZoom (LZ)
Net Cash Position: $195.4 million (12.6% of Market Cap)
Founded by famous lawyer Robert Shapiro, LegalZoom (NASDAQ: LZ) offers online legal services and documentation assistance for individuals and businesses.
Why Do We Like LZ?
- Subscription Units have grown by 10.5% annually, allowing for more profitable cross-selling opportunities if it can build complementary products and features
- Share buybacks catapulted its annual earnings per share growth to 289%, which outperformed its revenue gains over the last three years
- Free cash flow margin jumped by 13.1 percentage points over the last few years, giving the company more resources to pursue growth initiatives, repurchase shares, or pay dividends
LegalZoom is trading at $8.65 per share, or 9x forward EV/EBITDA. Is now the right time to buy? See for yourself in our full research report, it’s free.
High-Quality Stocks for All Market Conditions
Market indices reached historic highs following Donald Trump’s presidential victory in November 2024, but the outlook for 2025 is clouded by new trade policies that could impact business confidence and growth.
While this has caused many investors to adopt a "fearful" wait-and-see approach, we’re leaning into our best ideas that can grow regardless of the political or macroeconomic climate. Take advantage of Mr. Market 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
