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. That said, here are three companies with net cash positions to avoid and some better alternatives instead.
Nature's Sunshine (NATR)
Net Cash Position: $70.5 million (33.3% of Market Cap)
Started on a kitchen table in Utah, Nature’s Sunshine (NASDAQ: NATR) manufactures and sells nutritional and personal care products.
Why Are We Wary of NATR?
- Products fail to spark excitement with consumers, as seen in its flat sales over the last three years
- Subscale operations are evident in its revenue base of $454.4 million, meaning it has fewer distribution channels than its larger rivals
- Earnings per share fell by 31.3% annually over the last three years while its revenue was flat, showing each sale was less profitable
Nature's Sunshine’s stock price of $11.45 implies a valuation ratio of 14.5x forward price-to-earnings. If you’re considering NATR for your portfolio, see our FREE research report to learn more.
Plexus (PLXS)
Net Cash Position: $100.8 million (2.9% of Market Cap)
With over 20,000 team members across 26 global facilities, Plexus (NASDAQ: PLXS) designs, manufactures, and services complex electronic products for companies in aerospace/defense, healthcare, and industrial sectors.
Why Are We Hesitant About PLXS?
- Sales tumbled by 3.6% annually over the last two years, showing market trends are working against its favor during this cycle
- Earnings per share lagged its peers over the last two years as they only grew by 1.7% annually
- Low free cash flow margin of 2.9% for the last five years gives it little breathing room, constraining its ability to self-fund growth or return capital to shareholders
At $126.89 per share, Plexus trades at 17.4x forward price-to-earnings. Check out our free in-depth research report to learn more about why PLXS doesn’t pass our bar.
10x Genomics (TXG)
Net Cash Position: $310.8 million (30.4% of Market Cap)
Founded in 2012 by scientists seeking to overcome limitations in traditional biological research methods, 10x Genomics (NASDAQ: TXG) develops instruments, consumables, and software that enable researchers to analyze biological systems at single-cell resolution and spatial context.
Why Should You Sell TXG?
- Cash-burning tendencies make us wonder if it can sustainably generate shareholder value
- Push for growth has led to negative returns on capital, signaling value destruction, and its falling returns suggest its earlier profit pools are drying up
- Waning returns on capital from an already weak starting point displays the inefficacy of management’s past and current investment decisions
10x Genomics is trading at $8.39 per share, or 1.7x forward price-to-sales. Read our free research report to see why you should think twice about including TXG in your portfolio.
Stocks We Like More
The market surged in 2024 and reached record highs after Donald Trump’s presidential victory in November, but questions about new economic policies are adding much uncertainty for 2025.
While the crowd speculates what might happen next, we’re homing in on the companies that can succeed regardless of the political or macroeconomic environment. Put yourself in the driver’s seat and build a durable portfolio by checking out our Top 5 Strong Momentum Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 175% over the last five years.
Stocks that made our list in 2019 include now familiar names such as Nvidia (+2,183% between December 2019 and December 2024) as well as under-the-radar businesses like Comfort Systems (+751% five-year return). Find your next big winner with StockStory today for free.
