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.
Not all businesses with cash are winners, and that’s why we built StockStory - to help you separate the good from the bad. Keeping that in mind, here is one company with a net cash position that balances growth with stability and two best left off your watchlist.
Two Stocks to Sell:
The New York Times (NYT)
Net Cash Position: $172.1 million (1.9% of Market Cap)
Founded in 1851, The New York Times (NYSE: NYT) is an American media organization known for its influential newspaper and expansive digital journalism platforms.
Why Is NYT Not Exciting?
- Demand for its offerings was relatively low as its number of subscribers has underwhelmed
- Projected sales growth of 5.9% for the next 12 months suggests sluggish demand
- Waning returns on capital imply its previous profit engines are losing steam
At $55.41 per share, The New York Times trades at 25.8x forward P/E. Read our free research report to see why you should think twice about including NYT in your portfolio.
STAAR Surgical (STAA)
Net Cash Position: $136.4 million (14.8% of Market Cap)
With over 2.5 million implants performed worldwide, STAAR Surgical (NASDAQ: STAA) designs and manufactures implantable lenses that correct vision problems without removing the eye's natural lens.
Why Do We Avoid STAA?
- Constant currency revenue growth has disappointed over the past two years and shows demand was soft
- Free cash flow margin dropped by 26.6 percentage points over the last five years, implying the company became more capital intensive as competition picked up
- Diminishing returns on capital suggest its earlier profit pools are drying up
STAAR Surgical is trading at $18.68 per share, or 3.2x forward price-to-sales. To fully understand why you should be careful with STAA, check out our full research report (it’s free).
One Stock to Buy:
ServiceNow (NOW)
Net Cash Position: $4.20 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 Bullish on NOW?
- Demand is healthy as its current remaining performance obligations (cRPO) have averaged 22.3% growth over the last year, showing it’s securing new contracts for services yet to be fulfilled
- Healthy operating margin of 12.9% shows it’s a well-run company with efficient processes, and its rise over the last year was fueled by some leverage on its fixed costs
- Impressive free cash flow profitability enables the company to fund new investments or reward investors with share buybacks/dividends
ServiceNow’s stock price of $1,004 implies a valuation ratio of 15.5x forward price-to-sales. Is now the right time to buy? Find out in our full research report, it’s free.
Stocks We Like Even 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 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.
