Companies with more cash than debt can be financially resilient, but that doesn’t mean they’re all strong investments. Some lack leverage because they struggle to grow or generate consistent profits, making them unattractive borrowers.
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. That said, here is one company with a net cash position that can leverage its balance sheet to grow and two that may struggle.
Two Stocks to Sell:
Couchbase (BASE)
Net Cash Position: $138.1 million (10.3% of Market Cap)
Formed in 2011 with the merger of Membase and CouchOne, Couchbase (NASDAQ: BASE) is a database-as-a-service platform that allows enterprises to store large volumes of semi-structured data.
Why Does BASE Give Us Pause?
- Offerings struggled to generate meaningful interest as its average billings growth of 6.6% over the last year did not impress
- Customer acquisition costs take a while to recoup, making it difficult to justify sales and marketing investments that could increase revenue
- Negative free cash flow raises questions about the return timeline for its investments
Couchbase is trading at $24.37 per share, or 5.5x forward price-to-sales. If you’re considering BASE for your portfolio, see our FREE research report to learn more.
Plexus (PLXS)
Net Cash Position: $100.8 million (2.7% of Market Cap)
With over 20,000 team members across 26 global facilities, Plexus (NASDAQ: PLXS) designs, manufactures, and services complex electronic products for companies in aerospace/defense, healthcare, and industrial sectors.
Why Does PLXS Worry Us?
- Customers postponed purchases of its products and services this cycle as its revenue declined by 3.6% annually over the last two years
- Earnings growth over the last two years fell short of the peer group average as its EPS only increased by 5.2% annually
- Ability to fund investments or reward shareholders with increased buybacks or dividends is restricted by its weak free cash flow margin of 2.9% for the last five years
Plexus’s stock price of $135.53 implies a valuation ratio of 18.6x forward P/E. Dive into our free research report to see why there are better opportunities than PLXS.
One Stock to Buy:
Nextracker (NXT)
Net Cash Position: $766.1 million (8.9% of Market Cap)
With its technology playing a key role in the massive 1.2 gigawatt Noor Abu Dhabi solar farm project, Nextracker (NASDAQ: NXT) is a provider of solar tracker systems that help solar panels follow the sun.
Why Should You Buy NXT?
- Backlog has averaged 46.5% growth over the past two years, showing it has a pipeline of unfulfilled orders that will support revenue in the future
- Free cash flow margin increased by 13.6 percentage points over the last five years, giving the company more capital to invest or return to shareholders
- Returns on capital are climbing as management makes more lucrative bets
At $58.45 per share, Nextracker trades at 15x forward P/E. Is now the right time to buy? See for yourself 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 9 Market-Beating Stocks. 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-micro-cap company Tecnoglass (+1,754% 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
