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. Keeping that in mind, here are two companies with net cash positions that can leverage their balance sheets to grow and one best left off your watchlist.
One Stock to Sell:
Mercury General (MCY)
Net Cash Position: $900.8 million (24.2% of Market Cap)
Founded in 1961 and maintaining a network of over 6,300 independent agents across the country, Mercury General (NYSE: MCY) is an insurance company that primarily sells automobile insurance policies through independent agents in 11 states, with a strong focus on California.
Why Are We Wary of MCY?
- Expenses have increased as a percentage of revenue over the last four years as its pre-tax profit margin fell by 12.8 percentage points
- Muted 2.3% annual book value per share growth over the last five years shows its capital generation lagged behind its insurance peers
- Low return on equity reflects management’s struggle to allocate funds effectively
Mercury General is trading at $67.31 per share, or 2x forward P/B. To fully understand why you should be careful with MCY, check out our full research report (it’s free).
Two Stocks to Watch:
Tecnoglass (TGLS)
Net Cash Position: $50.48 million (1.4% of Market Cap)
The first-ever Colombian company to trade on the NASDAQ, Tecnoglass (NYSE: TGLS) is a manufacturer of architectural glass, windows, and aluminum products.
Why Are We Positive On TGLS?
- Annual revenue growth of 17.5% over the last five years was superb and indicates its market share increased during this cycle
- Excellent operating margin of 27.3% highlights the efficiency of its business model, and its operating leverage amplified its profits over the last five years
- Earnings growth has massively outpaced its peers over the last five years as its EPS has compounded at 47.3% annually
At $78.04 per share, Tecnoglass trades at 18.7x forward P/E. Is now the time to initiate a position? Find out in our full research report, it’s free.
Pure Storage (PSTG)
Net Cash Position: $1.31 billion (7% of Market Cap)
Founded in 2009 as a pioneer in enterprise all-flash storage technology, Pure Storage (NYSE: PSTG) provides all-flash data storage hardware and software that helps organizations manage their data more efficiently across on-premises and cloud environments.
Why Should You Buy PSTG?
- ARR trends over the past two years show it’s maintaining a steady flow of long-term contracts that contribute positively to its revenue predictability
- Incremental sales significantly boosted profitability as its annual earnings per share growth of 36.9% over the last five years outstripped its revenue performance
- PSTG is a free cash flow machine with the flexibility to invest in growth initiatives or return capital to shareholders, and its growing cash flow gives it even more resources to deploy
Pure Storage’s stock price of $56.93 implies a valuation ratio of 31.3x forward P/E. Is now the right time to buy? 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
