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.
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 three companies with net cash positions to avoid and some better alternatives instead.
Monarch (MCRI)
Net Cash Position: $57.79 million (3.1% of Market Cap)
Established in 1993, Monarch (NASDAQ: MCRI) operates luxury casinos and resorts, offering high-end gaming, dining, and hospitality experiences.
Why Are We Hesitant About MCRI?
- Sales trends were unexciting over the last two years as its 4% annual growth was below the typical consumer discretionary company
- Anticipated sales growth of 4.5% for the next year implies demand will be shaky
At $103.29 per share, Monarch trades at 20.7x forward P/E. Dive into our free research report to see why there are better opportunities than MCRI.
NerdWallet (NRDS)
Net Cash Position: $92.3 million (11.2% of Market Cap)
Born from founder Tim Chen's frustration with the lack of transparent credit card information when helping his sister in 2009, NerdWallet (NASDAQ: NRDS) is a digital platform that provides financial guidance to help consumers and small businesses make smarter decisions about credit cards, loans, insurance, and other financial products.
Why Do We Think Twice About NRDS?
- Push for growth has led to negative returns on capital, signaling value destruction
NerdWallet is trading at $11.07 per share, or 2x forward P/E. If you’re considering NRDS for your portfolio, see our FREE research report to learn more.
StoneX (SNEX)
Net Cash Position: $7.35 billion (148% of Market Cap)
Originally known as INTL FCStone until its 2020 rebranding, StoneX Group (NASDAQ: SNEX) provides a global financial services network connecting companies, traders, and investors to markets through clearing, execution, and advisory services.
Why Are We Wary of SNEX?
- Earnings growth over the last four years fell short of the peer group average as its EPS only increased by 3.2% annually
- Debt-to-equity ratio of 7.2× is concerningly high, indicating excessive leverage that could limit financial flexibility
StoneX’s stock price of $96.92 implies a valuation ratio of 2.3x forward P/E. Dive into our free research report to see why there are better opportunities than SNEX.
Stocks We Like More
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