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.
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 balances growth with stability and two with hidden risks.
Two Stocks to Sell:
Lancaster Colony (LANC)
Net Cash Position: $82.74 million (1.7% of Market Cap)
Known for its frozen garlic bread and Parkerhouse rolls, Lancaster Colony (NASDAQ: LANC) sells bread, dressing, and dips to the retail and food service channels.
Why Does LANC Worry Us?
- 5.4% annual revenue growth over the last three years was slower than its consumer staples peers
- Smaller revenue base of $1.89 billion means it hasn’t achieved the economies of scale that some industry juggernauts enjoy
- Estimated sales growth of 1.7% for the next 12 months implies demand will slow from its three-year trend
Lancaster Colony’s stock price of $172.87 implies a valuation ratio of 24.4x forward P/E. Read our free research report to see why you should think twice about including LANC in your portfolio.
Malibu Boats (MBUU)
Net Cash Position: $10.71 million (1.6% of Market Cap)
Founded in California in 1982, Malibu Boats (NASDAQ: MBUU) is a manufacturer of high-performance sports boats and luxury watercrafts.
Why Is MBUU Risky?
- Sluggish trends in its boats sold suggest customers aren’t adopting its solutions as quickly as the company hoped
- Earnings per share fell by 17.4% annually over the last five years while its revenue was flat, showing each sale was less profitable
- Eroding returns on capital from an already low base indicate that management’s recent investments are destroying value
Malibu Boats is trading at $34 per share, or 11.4x forward P/E. To fully understand why you should be careful with MBUU, check out our full research report (it’s free).
One Stock to Buy:
Cloudflare (NET)
Net Cash Position: $439 million (0.7% of Market Cap)
Founded by two grad students of Harvard Business School, Cloudflare (NYSE: NET) is a software-as-a-service platform that helps improve the security, reliability, and loading times of internet applications.
Why Is NET a Top Pick?
- Average billings growth of 27.9% over the last year enhances its liquidity and shows there is steady demand for its products
- Expected revenue growth of 25.5% for the next year suggests its market share will rise
- Fast payback periods on sales and marketing expenses allow the company to invest heavily and onboard many customers concurrently
At $192.50 per share, Cloudflare trades at 30x forward price-to-sales. Is now a good time to buy? Find out 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-small-cap company Comfort Systems (+782% 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
