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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 balance growth with stability and one best left off your watchlist.

One Stock to Sell:

UiPath (PATH)

Net Cash Position: $1.56 billion (22.2% of Market Cap)

Started in 2005 in Romania as a tech outsourcing company, UiPath (NYSE:PATH) makes software that helps companies automate repetitive computer tasks.

Why Does PATH Fall Short?

1. Products, pricing, or go-to-market strategy may need some adjustments as its 5.7% average billings growth over the last year was weak

2. Estimated sales growth of 6.4% for the next 12 months implies demand will slow from its three-year trend

3. Extended payback periods on sales investments suggest the company’s platform isn’t resonating enough to drive efficient sales conversions

UiPath is trading at $13.07 per share, or 4.8x forward price-to-sales. Read our free research report to see why you should think twice about including PATH in your portfolio, it’s free.

Two Stocks to Watch:

Grand Canyon Education (LOPE)

Net Cash Position: $199.3 million (3.6% of Market Cap)

Founded in 1949, Grand Canyon Education (NASDAQ:LOPE) is an educational services provider known for its operation at Grand Canyon University.

Why Does LOPE Stand Out?

1. Excellent operating margin of 26.5% highlights the efficiency of its business model

2. ROIC punches in at 30.2%, illustrating management’s expertise in identifying profitable investments, and its rising returns show it’s making even more lucrative bets

3. Returns on capital are growing as management capitalizes on its market opportunities

At $195.74 per share, Grand Canyon Education trades at 21.9x forward P/E. Is now a good time to buy? See for yourself in our comprehensive research report, it’s free.

CSW (CSWI)

Net Cash Position: $203.2 million (3.7% of Market Cap)

With over two centuries of combined operations manufacturing and supplying, CSW (NASDAQ:CSWI) offers special chemicals, coatings, sealants, and lubricants for various industries.

Why Will CSWI Outperform?

1. Impressive 17.8% annual revenue growth over the last five years indicates it’s winning market share this cycle

2. Performance over the past two years shows its incremental sales were extremely profitable, as its annual earnings per share growth of 21.9% outpaced its revenue gains

3. Strong free cash flow margin of 15% enables it to reinvest or return capital consistently, and its growing cash flow gives it even more resources to deploy