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.
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 that may struggle.
Two Stocks to Sell:
Champion Homes (SKY)
Net Cash Position: $470.2 million (13.1% of Market Cap)
Founded in 1951, Champion Homes (NYSE: SKY) is a manufacturer of modular homes and buildings in North America.
Why Does SKY Worry Us?
- Underwhelming unit sales over the past two years suggest it might have to lower prices to accelerate growth
- Falling earnings per share over the last two years has some investors worried as stock prices ultimately follow EPS over the long term
- Diminishing returns on capital suggest its earlier profit pools are drying up
Champion Homes is trading at $62.58 per share, or 15.8x forward P/E. Dive into our free research report to see why there are better opportunities than SKY.
Banner Bank (BANR)
Net Cash Position: $228.8 million (10.4% of Market Cap)
Founded in 1890 in Walla Walla, Washington, and evolving through more than a century of economic cycles, Banner Corporation (NASDAQ: BANR) operates Banner Bank, providing commercial banking services, loans, and financial products to individuals and businesses across Washington, Oregon, California, Idaho, and Utah.
Why Does BANR Fall Short?
- Sales tumbled by 2.2% annually over the last two years, showing market trends are working against its favor during this cycle
- Net interest income trends were unexciting over the last four years as its 3.5% annual growth was below the typical bank company
- Sales were less profitable over the last two years as its earnings per share fell by 9% annually, worse than its revenue declines
Banner Bank’s stock price of $64.02 implies a valuation ratio of 1.1x forward P/B. To fully understand why you should be careful with BANR, check out our full research report (it’s free).
One Stock to Watch:
Pinterest (PINS)
Net Cash Position: $2.47 billion (10.2% of Market Cap)
Created with the idea of virtually replacing paper catalogues, Pinterest (NYSE: PINS) is an online image and social discovery platform.
Why Could PINS Be a Winner?
- Has the opportunity to boost monetization through new features and premium offerings as its monthly active users have grown by 10.4% annually over the last two years
- Healthy EBITDA margin of 27% shows it’s a well-run company with efficient processes
- Robust free cash flow margin of 24.7% gives it many options for capital deployment
At $35.60 per share, Pinterest trades at 19.8x forward EV/EBITDA. Is now a good time to buy? See for yourself in our comprehensive 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.
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