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.
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 three companies with net cash positions to steer clear of and a few alternatives to consider.
Asana (ASAN)
Net Cash Position: $203.8 million (5.5% of Market Cap)
Founded in 2008 by Facebook’s co-founder Dustin Moskovitz, Asana (NYSE:ASAN) is a cloud-based project management software, where you can plan and assign tasks to employees and monitor and discuss progress of work.
Why Does ASAN Fall Short?
- Offerings struggled to generate meaningful interest as its average billings growth of 9.4% over the last year did not impress
- Net revenue retention rate of 97.5% shows it has a tough time retaining customers
- Track record of operating losses stem from its decision to pursue growth instead of profits
Asana’s stock price of $15.98 implies a valuation ratio of 4.7x forward price-to-sales. Read our free research report to see why you should think twice about including ASAN in your portfolio.
Leonardo DRS (DRS)
Net Cash Position: $233 million (2.4% of Market Cap)
Developing submarine detection systems for the U.S. Navy, Leonardo DRS (NASDAQ:DRS) is a provider of defense systems, electronics, and military support services.
Why Is DRS Not Exciting?
- 3.9% annual revenue growth over the last four years was slower than its industrials peers
- Falling earnings per share over the last three years has some investors worried as stock prices ultimately follow EPS over the long term
- Eroding returns on capital suggest its historical profit centers are aging
At $37.15 per share, Leonardo DRS trades at 34.9x forward price-to-earnings. If you’re considering DRS for your portfolio, see our FREE research report to learn more.
Exponent (EXPO)
Net Cash Position: $177.4 million (4.4% of Market Cap)
With a team of over 800 consultants holding advanced degrees in 90+ technical disciplines, Exponent (NASDAQ:EXPO) is a science and engineering consulting firm that investigates complex problems and provides expert analysis for clients across various industries.
Why Do We Think Twice About EXPO?
- Modest revenue base of $518.5 million gives it less fixed cost leverage and fewer distribution channels than larger companies
- Earnings per share lagged its peers over the last two years as they only grew by 5.4% annually
- Waning returns on capital imply its previous profit engines are losing steam
Exponent is trading at $79.22 per share, or 37.8x forward price-to-earnings. Dive into our free research report to see why there are better opportunities than EXPO.
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 Growth Stocks for this month. 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 Sterling Infrastructure (+1,096% five-year return). Find your next big winner with StockStory today for free.