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 can leverage its balance sheet to grow and two with hidden risks.
Two Stocks to Sell:
Marqeta (MQ)
Net Cash Position: $988.4 million (35.3% of Market Cap)
Founded by CEO Jason Gardner in 2009, Marqeta (NASDAQ: MQ) is an innovative card issuer that provides companies with the ability to issue and process virtual, physical, and tokenized credit and debit cards.
Why Does MQ Give Us Pause?
- Software offerings aren’t resonating in this new AI paradigm as its revenue declined by 2.8% annually over the last three years
- High servicing costs result in a relatively inferior gross margin of 69.4% that must be offset through increased usage
At $5.98 per share, Marqeta trades at 4.9x forward price-to-sales. Check out our free in-depth research report to learn more about why MQ doesn’t pass our bar.
Coursera (COUR)
Net Cash Position: $744.9 million (55.3% of Market Cap)
Founded by two Stanford University computer science professors, Coursera (NYSE: COUR) is an online learning platform that offers courses, specializations, and degrees from top universities and organizations around the world.
Why Are We Wary of COUR?
- Focus on expanding its platform came at the expense of monetization as its average revenue per customer fell by 5.2% annually
- Estimated sales growth of 4.1% for the next 12 months implies demand will slow from its three-year trend
- Expensive marketing campaigns hurt its profitability and make us wonder what would happen if it let up on the gas
Coursera’s stock price of $8.40 implies a valuation ratio of 23.7x forward EV/EBITDA. Read our free research report to see why you should think twice about including COUR in your portfolio.
One Stock to Watch:
Cincinnati Financial (CINF)
Net Cash Position: $107 million (0.5% of Market Cap)
Founded in 1950 by independent insurance agents seeking stable market options for their clients, Cincinnati Financial (NASDAQ: CINF) provides property casualty insurance, life insurance, and related financial services through independent agencies across 46 states.
Why Does CINF Catch Our Eye?
- Annual net premiums earned growth of 10.9% over the past two years was outstanding, reflecting market share gains this cycle
- Impressive 11.9% annual book value per share growth over the last five years indicates it’s building equity value this cycle
- Market-beating return on equity illustrates that management has a knack for investing in profitable ventures
Cincinnati Financial is trading at $147.85 per share, or 1.6x forward P/B. Is now the time to initiate a position? See for yourself in our full research report, it’s free.
Stocks We Like Even More
Donald Trump’s victory in the 2024 U.S. Presidential Election sent major indices to all-time highs, but stocks have retraced as investors debate the health of the economy and the potential impact of tariffs.
While this leaves much uncertainty around 2025, a few companies are poised for long-term gains regardless of the political or macroeconomic climate, like 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 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
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