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 is one company with a net cash position that can leverage its balance sheet to grow and two best left off your watchlist.
Two Stocks to Sell:
Salesforce (CRM)
Net Cash Position: $6.04 billion (2.4% of Market Cap)
Launched in 1999 from a rented one-bedroom apartment in San Francisco by Marc Benioff and his three co-founders, Salesforce (NYSE:CRM) is a software-as-a-service platform that helps companies access, manage, and share sales information such as leads.
Why Do We Think Twice About CRM?
- Scale is a double-edged sword because it limits the company’s growth potential compared to its smaller competitors, as reflected in its below-average annual revenue increases of 11.4% for the last three years
- ARR growth averaged a weak 8.7% over the last year, suggesting that competition is pulling some attention away from its software
- Estimated sales growth of 9.1% for the next 12 months implies demand will slow from its three-year trend
Salesforce’s stock price of $258.39 implies a valuation ratio of 5.9x forward price-to-sales. Check out our free in-depth research report to learn more about why CRM doesn’t pass our bar.
Okta (OKTA)
Net Cash Position: $1.78 billion (11.1% of Market Cap)
Founded during the aftermath of the financial crisis in 2009, Okta (NASDAQ:OKTA) is a cloud-based software-as-a-service platform that helps companies manage identity for their employees and customers.
Why Are We Hesitant About OKTA?
- Products, pricing, or go-to-market strategy may need some adjustments as its 9.9% average billings growth over the last year was weak
- Estimated sales growth of 9% for the next 12 months implies demand will slow from its three-year trend
- Projected 1.4 percentage point decline in its free cash flow margin next year reflects the company’s plans to increase its investments to defend its market position
At $91.60 per share, Okta trades at 5.7x forward price-to-sales. To fully understand why you should be careful with OKTA, check out our full research report (it’s free).
One Stock to Watch:
Republic Bancorp (RBCAA)
Net Cash Position: $387.5 million (26.8% of Market Cap)
With roots dating back to 1974 and operating across multiple states including Kentucky, Indiana, Florida, Ohio, and Tennessee, Republic Bancorp (NASDAQGS:RBCA.A) is a Kentucky-based financial holding company that operates a bank offering traditional banking, mortgage services, and specialized financial products.
Why Are We Fans of RBCAA?
- Annual revenue growth of 10.3% over the past two years was outstanding, reflecting market share gains this cycle
- Differentiated product suite leads to a Strong performance of its loan book results in a High-yielding loan book and low cost of funds lead to a best-in-class net interest margin of 5%
- Incremental sales over the last two years have been highly profitable as its earnings per share increased by 13.2% annually, topping its revenue gains
Republic Bancorp is trading at $74.17 per share, or 1.3x forward P/B. Is now a good time to buy? Find out in our full research report, it’s free.
High-Quality Stocks for All Market Conditions
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 9 Market-Beating Stocks. 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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