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 is one company with a net cash position that can continue growing sustainably and two with hidden risks.
Two Stocks to Sell:
Insperity (NSP)
Net Cash Position: $141 million (7.3% of Market Cap)
Pioneering the professional employer organization (PEO) industry it helped establish, Insperity (NYSE: NSP) provides human resources outsourcing services to small and medium-sized businesses, handling payroll, benefits, compliance, and HR administration.
Why Does NSP Fall Short?
- Sales trends were unexciting over the last two years as its 2.5% annual growth was below the typical business services company
- Efficiency has decreased over the last five years as its adjusted operating margin fell by 3.6 percentage points
- Incremental sales over the last five years were much less profitable as its earnings per share fell by 27.1% annually while its revenue grew
Insperity’s stock price of $50.29 implies a valuation ratio of 21.5x forward P/E. Read our free research report to see why you should think twice about including NSP in your portfolio.
Artisan Partners (APAM)
Net Cash Position: $19.59 million (0.8% of Market Cap)
Founded in 1994 with a focus on autonomous investment teams and a "high-value-added" approach, Artisan Partners (NYSE: APAM) is an investment management firm that offers actively managed equity and fixed income strategies to institutional and individual investors.
Why Do We Pass on APAM?
- Muted 2.8% annual revenue growth over the last five years shows its demand lagged behind its financials peers
- Earnings per share fell by 1.3% annually over the last five years while its revenue grew, showing its incremental sales were much less profitable
At $36.66 per share, Artisan Partners trades at 9.6x forward P/E. To fully understand why you should be careful with APAM, check out our full research report (it’s free).
One Stock to Buy:
Monster (MNST)
Net Cash Position: $3.42 billion (3.9% of Market Cap)
Founded in 2002 as a natural soda and juice company, Monster Beverage (NASDAQ: MNST) is a pioneer of the energy drink category, and its Monster Energy brand targets a young, active demographic.
Why Are We Bullish on MNST?
- Excellent operating margin of 28.6% highlights the efficiency of its business model, and its rise over the last year was fueled by some leverage on its fixed costs
- Impressive free cash flow profitability enables the company to fund new investments or reward investors with share buybacks/dividends
- Stellar returns on capital showcase management’s ability to surface highly profitable business ventures, and its returns are climbing as it finds even more attractive growth opportunities
Monster is trading at $44.65 per share, or 36.1x forward P/E. Is now the right time to buy? See for yourself in our full research report, it’s free.
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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-micro-cap company Kadant (+214% between June 2020 and June 2025). Find your next big winner with StockStory today.
