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.
Not all businesses with cash are winners, and that’s why we built StockStory - to help you separate the good from the bad. 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:
Equitable Holdings (EQH)
Net Cash Position: $5.77 billion (41.9% of Market Cap)
Tracing its roots back to 1859 as one of America's oldest financial institutions, Equitable Holdings (NYSE: EQH) provides retirement planning, asset management, and life insurance products through its two main franchises, Equitable and AllianceBernstein.
Why Do We Think Twice About EQH?
- Scale is a double-edged sword because it limits the company’s growth potential compared to its smaller competitors, as reflected in its below-average annual revenue increases of 2.5% for the last five years
- Efficiency has decreased over the last two years as its pre-tax profit margin fell by 13.3 percentage points
- Book value per share tumbled by 167% annually over the last five years, showing insurance sector trends are working against it during this cycle
Equitable Holdings is trading at $48.95 per share, or 6.4x forward P/E. Check out our free in-depth research report to learn more about why EQH doesn’t pass our bar.
First American Financial (FAF)
Net Cash Position: $41.8 million (0.5% of Market Cap)
Tracing its roots back to 1889 when California was experiencing its first major real estate boom, First American Financial (NYSE: FAF) provides title insurance, settlement services, and risk solutions for residential and commercial real estate transactions across the United States and internationally.
Why Are We Cautious About FAF?
- Insurance offerings face significant market challenges this cycle as net premiums earned contracted by 1.9% annually over the last five years
- Flat earnings per share over the last five years lagged its peers
- Capital trends were unexciting over the last five years as its 2.8% annual book value per share growth was below the typical insurance firm
At $76.25 per share, First American Financial trades at 1.3x forward P/B. If you’re considering FAF for your portfolio, see our FREE research report to learn more.
One Stock to Buy:
Zscaler (ZS)
Net Cash Position: $1.67 billion (7% of Market Cap)
Pioneering the "zero trust" approach that has fundamentally changed enterprise network security, Zscaler (NASDAQ: ZS) provides a cloud-based security platform that connects users, devices, and applications securely without traditional network-based security hardware.
Why Is ZS a Top Pick?
- Customers view its software as mission-critical to their operations as its ARR has averaged 24.4% growth over the last year
- Fast payback periods on sales and marketing expenses allow the company to invest heavily and onboard many customers concurrently
- Strong free cash flow margin of 28.1% enables it to reinvest or return capital consistently
Zscaler’s stock price of $148.22 implies a valuation ratio of 6.6x forward price-to-sales. Is now the right time to buy? See for yourself in our comprehensive research report, it’s free.
Stocks We Like Even More
ONE MORE THING: Top 6 Stocks for This Week. This market is separating quality stocks from expensive ones fast. AI is taking down whole sectors with no warning. In a rotation this fast, you need more than a list of good companies.
Our AI system flagged Palantir before it ran 1,662% between October 2022 and February 2026. AppLovin before it ran 753% between February 2024 and February 2026. Nvidia before it ran 1,178% between January 2023 and February 2026. Each week it produces 6 new names that pass the same tests. Get Our Top 6 Stocks for Free HERE.
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Exlservice (+271% between June 2020 and June 2025). Find your next big winner with StockStory today.
