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.
Financial flexibility is valuable, but it’s not everything - at StockStory, we help you find the stocks that can not only survive but also outperform. That said, here are two companies with net cash positions that balance growth with stability and one that may struggle.
One Stock to Sell:
Lattice Semiconductor (LSCC)
Net Cash Position: $91.18 million (1% of Market Cap)
A global leader in its category, Lattice Semiconductor (NASDAQ: LSCC) is a semiconductor designer specializing in customer-programmable chips that enhance CPU performance for intensive tasks such as machine learning.
Why Does LSCC Give Us Pause?
- Customers postponed purchases of its products and services this cycle as its revenue declined by 17.8% annually over the last two years
- Expenses have increased as a percentage of revenue over the last five years as its operating margin fell by 15 percentage points
- Earnings growth underperformed the sector average over the last five years as its EPS grew by just 5.2% annually
Lattice Semiconductor is trading at $66.03 per share, or 52.5x forward P/E. If you’re considering LSCC for your portfolio, see our FREE research report to learn more.
Two Stocks to Watch:
Datadog (DDOG)
Net Cash Position: $2.65 billion (5.8% of Market Cap)
Named after a database the founders had to painstakingly look after at their previous company, Datadog (NASDAQ: DDOG) provides a software platform that helps organizations monitor and secure their cloud applications, infrastructure, and services.
Why Does DDOG Stand Out?
- Ability to secure long-term commitments with customers is evident in its 26% ARR growth over the last year
- Software platform has product-market fit given the rapid recovery of its customer acquisition costs
- DDOG is a free cash flow machine with the flexibility to invest in growth initiatives or return capital to shareholders
At $131.71 per share, Datadog trades at 13x forward price-to-sales. Is now the time to initiate a position? Find out in our full research report, it’s free.
Intuitive Surgical (ISRG)
Net Cash Position: $5.33 billion (3.3% of Market Cap)
Pioneering minimally invasive surgery since its first da Vinci system was FDA-cleared in 2000, Intuitive Surgical (NASDAQ: ISRG) develops and manufactures robotic-assisted surgical systems that enable minimally invasive procedures across various medical specialties.
Why Is ISRG Interesting?
- Products are reaching more customers as its system placement averaged 11.4% growth over the past two years
- Sales outlook for the upcoming 12 months implies the business will stay on its desirable two-year growth trajectory
- Earnings growth has massively outpaced its peers over the last five years as its EPS has compounded at 17.7% annually
Intuitive Surgical’s stock price of $453.50 implies a valuation ratio of 54.3x forward P/E. Is now a good time to buy? See for yourself in our full research report, it’s free.
High-Quality Stocks for All Market Conditions
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