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.
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 is one company with a net cash position that balances growth with stability and two that may struggle.
Two Stocks to Sell:
Stifel (SF)
Net Cash Position: $394.7 million (3.4% of Market Cap)
Tracing its roots back to 1890 when the firm was established in St. Louis, Stifel Financial (NYSE: SF) is a financial services firm that provides wealth management, investment banking, and institutional brokerage services to individuals, corporations, and institutions.
Why Does SF Worry Us?
- Muted 7.5% annual revenue growth over the last five years shows its demand lagged behind its financials peers
- Annual earnings per share growth of 4.1% underperformed its revenue over the last two years, showing its incremental sales were less profitable
- 4% annual book value per share growth over the last two years was slower than its financials peers
Stifel is trading at $115 per share, or 13.7x forward P/E. To fully understand why you should be careful with SF, check out our full research report (it’s free).
Cincinnati Financial (CINF)
Net Cash Position: $86 million (0.4% of Market Cap)
Founded in 1950 by independent insurance agents seeking stable market options for their clients, Cincinnati Financial (NASDAQ: CINF) provides property casualty insurance, life insurance, and related financial services through independent agencies across 46 states.
Why Does CINF Fall Short?
- Sizable revenue base leads to growth challenges as its 6.8% annual revenue increases over the last five years fell short of other insurance companies
- Day-to-day expenses have swelled relative to revenue over the last four years as its combined ratio increased by 8.4 percentage points
- Estimated book value per share growth of 2.8% for the next 12 months implies profitability will slow from its two-year trend
Cincinnati Financial’s stock price of $154.44 implies a valuation ratio of 1.7x forward P/B. Dive into our free research report to see why there are better opportunities than CINF.
One Stock to Buy:
GitLab (GTLB)
Net Cash Position: $1.17 billion (14.3% of Market Cap)
With its all-remote workforce pioneering a new approach to software development, GitLab (NASDAQ: GTLB) provides a single-application DevSecOps platform that helps development, operations, and security teams collaborate to build, secure, and deploy software faster.
Why Are We Backing GTLB?
- ARR trends over the last year show it’s maintaining a steady flow of long-term contracts that contribute positively to its revenue predictability
- Prominent and differentiated software results in a best-in-class gross margin of 88.5%
- Strong free cash flow margin of 25.9% enables it to reinvest or return capital consistently
At $48.82 per share, GitLab trades at 7.9x forward price-to-sales. Is now the time to initiate a position? 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 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-micro-cap company Kadant (+351% 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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