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.
Not all businesses with cash are winners, and that’s why we built StockStory - to help you separate the good from the bad. That said, here is one company with a net cash position that balances growth with stability and two with hidden risks.
Two Stocks to Sell:
JFrog (FROG)
Net Cash Position: $597.9 million (10.2% of Market Cap)
Named after the amphibian that continuously evolves from egg to tadpole to adult, JFrog (NASDAQ: FROG) provides a platform that helps organizations securely create, store, manage, and distribute software packages across any system.
Why Does FROG Worry Us?
- Operating losses show it sacrificed profitability while scaling the business
- Capital intensity will likely ramp up in the next year as its free cash flow margin is expected to contract by 8.9 percentage points
JFrog is trading at $50.11 per share, or 10.6x forward price-to-sales. To fully understand why you should be careful with FROG, check out our full research report (it’s free).
Mercury General (MCY)
Net Cash Position: $813.8 million (19.1% 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 Hesitant About MCY?
- Day-to-day expenses have swelled relative to revenue over the last four years as its combined ratio increased by 7.5 percentage points
- 1.6% annual book value per share growth over the last five years was slower than its insurance peers
- Below-average return on equity indicates management struggled to find compelling investment opportunities
Mercury General’s stock price of $77.13 implies a valuation ratio of 2.1x forward P/B. Read our free research report to see why you should think twice about including MCY in your portfolio.
One Stock to Buy:
Alignment Healthcare (ALHC)
Net Cash Position: $140.6 million (4.4% of Market Cap)
Founded in 2013 with a mission to transform healthcare for seniors, Alignment Healthcare (NASDAQ: ALHC) provides Medicare Advantage health plans for seniors with features like concierge services, transportation benefits, and technology-driven care coordination.
Why Will ALHC Beat the Market?
- Customer growth averaged 40.2% over the past two years, showing its ability to "land" new contracts and potentially "expand" them later - a powerful one-two punch for sales
- Earnings per share grew by 45.5% annually over the last four years and trumped its peers
- Free cash flow profile has reached break even, showing the company is at an important crossroads
At $16.53 per share, Alignment Healthcare trades at 44.5x forward EV-to-EBITDA. 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 2025 "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 6 Stocks for this week. 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 Tecnoglass (+1,754% 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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