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 balance growth with stability and one that may struggle.
One Stock to Sell:
Butterfield Bank (NTB)
Net Cash Position: $1.39 billion (75.6% of Market Cap)
Founded in 1784 as one of the oldest banks in the Western Hemisphere, Butterfield Bank (NYSE: NTB) provides banking, wealth management, and trust services to individuals and businesses in select offshore financial centers including Bermuda, Cayman Islands, and the Channel Islands.
Why Are We Cautious About NTB?
- Muted 1.4% annual net interest income growth over the last five years shows its demand lagged behind its bank peers
- Estimated net interest income decline of 42.5% for the next 12 months implies a challenging demand environment
- Weak unit economics are reflected in its net interest margin of 2.7%, one of the worst among bank companies
At $44.72 per share, Butterfield Bank trades at 1.6x forward P/B. Check out our free in-depth research report to learn more about why NTB doesn’t pass our bar.
Two Stocks to Buy:
ServiceNow (NOW)
Net Cash Position: $3.72 billion (2% of Market Cap)
Founded by Fred Luddy, who coded the company's initial prototype on a flight from San Francisco to London, ServiceNow (NYSE: NOW) is a software provider helping companies automate workflows across IT, HR, and customer service.
Why Are We Backing NOW?
- Demand is healthy as its current remaining performance obligations (cRPO) have averaged 22.9% growth over the last year, showing it’s securing new contracts for services yet to be fulfilled
- Healthy operating margin shows it’s a well-run company with efficient processes, and it turbocharged its profits by achieving some fixed cost leverage
- Robust free cash flow margin gives it many options for capital deployment
ServiceNow is trading at $912.03 per share, or 13.3x forward price-to-sales. Is now the right time to buy? Find out in our full research report, it’s free.
Atlassian (TEAM)
Net Cash Position: $1.74 billion (3.6% of Market Cap)
Founded by Australian co-CEOs Mike Cannon-Brookes and Scott Farquhar in 2002, Atlassian (NASDAQ: TEAM) provides software as a service that makes it easier for large teams of software developers to manage projects, especially in software development.
Why Do We Love TEAM?
- Winning new contracts that can potentially increase in value as its billings growth has averaged 14.7% over the last year
- Software platform has product-market fit given the rapid recovery of its customer acquisition costs
- Impressive free cash flow profitability enables the company to fund new investments or reward investors with share buybacks/dividends
Atlassian’s stock price of $182.90 implies a valuation ratio of 8.2x forward price-to-sales. Is now a good time to buy? See for yourself in our comprehensive research report, it’s free.
Stocks We Like Even More
Trump’s April 2024 tariff bombshell triggered a massive market selloff, but stocks have since staged an impressive recovery, leaving those who panic sold on the sidelines.
Take advantage of the rebound by checking 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 Comfort Systems (+782% five-year return). Find your next big winner with StockStory today for free.
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