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.
Not all businesses with cash are winners, and that’s why we built StockStory - to help you separate the good from the bad. Keeping that in mind, here is one company with a net cash position that can leverage its balance sheet to grow and two that may struggle.
Two Stocks to Sell:
Penguin Solutions (PENG)
Net Cash Position: $12.42 million (1% of Market Cap)
Based in the US, Penguin Solutions (NASDAQ: PENG) is a diversified semiconductor company offering memory, digital, and LED products.
Why Do We Avoid PENG?
- Annual sales declines of 5% for the past two years show its products and services struggled to connect with the market during this cycle
- Poor expense management has led to an operating margin of 2.5% that is below the industry average
- Underwhelming 5% return on capital reflects management’s difficulties in finding profitable growth opportunities, and its falling returns suggest its earlier profit pools are drying up
Penguin Solutions’s stock price of $24.43 implies a valuation ratio of 14.3x forward P/E. Check out our free in-depth research report to learn more about why PENG doesn’t pass our bar.
News Corp (NWSA)
Net Cash Position: $130 million (0.7% of Market Cap)
Established in 2013 after a restructuring, News Corp (NASDAQ: NWSA) is a multinational conglomerate known for its news publishing, broadcasting, digital media, and book publishing.
Why Are We Out on NWSA?
- Annual revenue declines of 2.5% over the last five years indicate problems with its market positioning
- Anticipated sales growth of 2.5% for the next year implies demand will be shaky
- ROIC of 6.3% reflects management’s challenges in identifying attractive investment opportunities
At $30.21 per share, News Corp trades at 33.4x forward P/E. Dive into our free research report to see why there are better opportunities than NWSA.
One Stock to Buy:
F&G Annuities & Life (FG)
Net Cash Position: $1.64 billion (39.2% of Market Cap)
Founded in 1959 and serving approximately 677,000 policyholders who rely on its financial protection products, F&G Annuities & Life (NYSE: FG) provides fixed annuities, life insurance, and pension risk transfer solutions to retail and institutional clients.
Why Are We Bullish on FG?
- Annual net premiums earned growth of 33.9% over the last two years was superb and indicates its market share increased during this cycle
- Impressive 28.3% annual book value per share growth over the last two years indicates it’s building equity value this cycle
- Capital generation for the next 12 months is expected to accelerate above its two-year trend as Wall Street forecasts robust book value per share growth of 50.3%
F&G Annuities & Life is trading at $31.04 per share, or 0.9x forward P/B. Is now the right time to buy? Find out in our full research report, it’s free.
High-Quality Stocks for All Market Conditions
Donald Trump’s April 2024 "Liberation Day" tariffs sent markets into a tailspin, but stocks have since rebounded strongly, proving that knee-jerk reactions often create the best buying opportunities.
The smart money is already positioning for the next leg up. Don’t miss out on the recovery - check out 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-small-cap company Exlservice (+354% 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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