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 are two companies with net cash positions that can continue growing sustainably and one that may struggle.
One Stock to Sell:
Supernus Pharmaceuticals (SUPN)
Net Cash Position: $402.8 million (19.7% of Market Cap)
With a diverse portfolio of eight FDA-approved medications targeting neurological conditions, Supernus Pharmaceuticals (NASDAQ: SUPN) develops and markets treatments for central nervous system disorders including epilepsy, ADHD, Parkinson's disease, and migraine.
Why Are We Out on SUPN?
- Products and services are facing end-market challenges during this cycle, as seen in its flat sales over the last two years
- Smaller revenue base of $668 million means it hasn’t achieved the economies of scale that some industry juggernauts enjoy
- Eroding returns on capital from an already low base indicate that management’s recent investments are destroying value
Supernus Pharmaceuticals’s stock price of $32.67 implies a valuation ratio of 15.9x forward P/E. To fully understand why you should be careful with SUPN, check out our full research report (it’s free).
Two Stocks to Buy:
Datadog (DDOG)
Net Cash Position: $2.57 billion (5.2% of Market Cap)
Named after a database the founders had to painstakingly look after at their previous company, Datadog (NASDAQ: DDOG) is a software-as-a-service platform that makes it easier to monitor cloud infrastructure and applications.
Why Will DDOG Beat the Market?
- ARR trends over the last year show it’s maintaining a steady flow of long-term contracts that contribute positively to its revenue predictability
- User-friendly software enables clients to ramp up spending quickly, leading to the speedy recovery of customer acquisition costs
- DDOG is a free cash flow machine with the flexibility to invest in growth initiatives or return capital to shareholders
At $142.63 per share, Datadog trades at 15.4x forward price-to-sales. Is now a good time to buy? See for yourself in our in-depth research report, it’s free.
Coinbase (COIN)
Net Cash Position: $8.69 billion (9.1% of Market Cap)
Widely regarded as the face of crypto, Coinbase (NASDAQ: COIN) is a blockchain infrastructure company updating the financial system with its trading, staking, stablecoin, and other payment solutions.
Why Is COIN a Good Business?
- Monetization efforts are paying off as its average revenue per user has grown by 58.2% annually over the last two years
- Performance over the past two years shows its incremental sales were extremely profitable, as its annual earnings per share growth of 64.5% outpaced its revenue gains
- Robust free cash flow margin of 25.9% gives it many options for capital deployment, and its expanding margin gives it even more flexibility
Coinbase is trading at $375.50 per share, or 29x forward EV/EBITDA. Is now the right 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 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-small-cap company Exlservice (+354% 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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