In This Article:
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.
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 two companies with net cash positions that balance growth with stability and one with hidden risks.
One Stock to Sell:
Azenta (AZTA)
Net Cash Position: $409.1 million (33.1% of Market Cap)
Serving as the guardian of some of medicine's most valuable materials, Azenta (NASDAQ:AZTA) provides biological sample management, storage, and genomic services that help pharmaceutical and biotechnology companies preserve and analyze critical research materials.
Why Do We Avoid AZTA?
-
Customers postponed purchases of its products and services this cycle as its revenue declined by 6.5% annually over the last five years
-
Earnings per share have dipped by 9% annually over the past five years, which is concerning because stock prices follow EPS over the long term
-
Negative free cash flow raises questions about the return timeline for its investments
Azenta’s stock price of $26.83 implies a valuation ratio of 52.4x forward price-to-earnings. To fully understand why you should be careful with AZTA, check out our full research report (it’s free).
Two Stocks to Watch:
Graham Corporation (GHM)
Net Cash Position: $22.05 million (6.5% of Market Cap)
Founded when its founder patented a unique design for a vacuum system used in the sugar refining process, Graham (NYSE:GHM) provides vacuum and heat transfer equipment for the energy, petrochemical, refining, and chemical sectors.
Why Is GHM a Good Business?
-
Impressive 17% annual revenue growth over the last five years indicates it’s winning market share this cycle
-
Earnings per share have massively outperformed its peers over the last two years, increasing by 298% annually
-
Free cash flow margin jumped by 5.6 percentage points over the last five years, giving the company more resources to pursue growth initiatives, repurchase shares, or pay dividends
At $30.50 per share, Graham Corporation trades at 25.8x forward price-to-earnings. Is now the right time to buy? See for yourself in our comprehensive research report, it’s free.
WEBTOON (WBTN)
Net Cash Position: $555.2 million (47% of Market Cap)
Pioneering a vertical-scrolling format optimized for mobile devices, WEBTOON Entertainment (NASDAQ:WBTN) operates a global platform where creators publish serialized web-comics and web-novels that users can read in bite-sized episodes.