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. 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:
Markforged (MKFG)
Net Cash Position: $47.86 million (48.7% of Market Cap)
Beginning as a start-up at SolidWorks World–an annual design and engineering conference, Markforged (NYSE: MKFG) offers 3D printers and softwares to manufacturers of various industries.
Why Are We Hesitant About MKFG?
- Sales tumbled by 8.2% annually over the last two years, showing market trends are working against its favor during this cycle
- Capital intensity has ramped up over the last five years as its free cash flow margin decreased by 63.8 percentage points
- Depletion of cash reserves could lead to a fundraising event that triggers shareholder dilution
Markforged is trading at $4.60 per share, or 1x forward price-to-sales. To fully understand why you should be careful with MKFG, check out our full research report (it’s free).
LeMaitre (LMAT)
Net Cash Position: $117.2 million (6.4% of Market Cap)
Founded in 1983 and named after a pioneering vascular surgeon, LeMaitre Vascular (NASDAQGM:LMAT) develops and manufactures specialized medical devices used by vascular surgeons to treat peripheral vascular disease and other circulatory conditions.
Why Are We Cautious About LMAT?
- Smaller revenue base of $226.3 million means it hasn’t achieved the economies of scale that some industry juggernauts enjoy
- Operating margin failed to increase over the last five years, indicating the company couldn’t optimize its expenses
- 8.9 percentage point decline in its free cash flow margin over the last five years reflects the company’s increased investments to defend its market position
LeMaitre’s stock price of $81.50 implies a valuation ratio of 35.2x forward P/E. Read our free research report to see why you should think twice about including LMAT in your portfolio.
One Stock to Buy:
Airbnb (ABNB)
Net Cash Position: $7.5 billion (9.6% of Market Cap)
Founded by Brian Chesky and Joe Gebbia in their San Francisco apartment, Airbnb (NASDAQ: ABNB) is the world’s largest online marketplace for lodging, primarily homestays.
Why Is ABNB a Good Business?
- Nights and Experiences Booked are rising, meaning the company can increase revenue without incurring additional customer acquisition costs if it can cross-sell additional products and features
- Earnings growth has massively outpaced its peers over the last three years as its EPS has compounded at 49.4% annually
- ABNB is a free cash flow machine with the flexibility to invest in growth initiatives or return capital to shareholders
At $125.75 per share, Airbnb trades at 18.8x forward EV/EBITDA. Is now the right time to buy? Find out in our full research report, it’s free.
Stocks We Like Even More
Market indices reached historic highs following Donald Trump’s presidential victory in November 2024, but the outlook for 2025 is clouded by new trade policies that could impact business confidence and growth.
While this has caused many investors to adopt a "fearful" wait-and-see approach, we’re leaning into our best ideas that can grow regardless of the political or macroeconomic climate. Take advantage of Mr. Market 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 Comfort Systems (+751% five-year return). Find your next big winner with StockStory today for free.
