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. Keeping that in mind, here is one company with a net cash position that can leverage its balance sheet to grow and two best left off your watchlist.
Two Stocks to Sell:
Corcept (CORT)
Net Cash Position: $315.9 million (3.8% of Market Cap)
Focusing on the powerful stress hormone that affects everything from metabolism to immune function, Corcept Therapeutics (NASDAQ:CORT) develops and markets medications that modulate cortisol to treat endocrine disorders, cancer, and neurological diseases.
Why Does CORT Give Us Pause?
- Modest revenue base of $685.4 million gives it less fixed cost leverage and fewer distribution channels than larger companies
- Day-to-day expenses have swelled relative to revenue over the last five years as its adjusted operating margin fell by 16.2 percentage points
- 16.1 percentage point decline in its free cash flow margin over the last five years reflects the company’s increased investments to defend its market position
Corcept’s stock price of $79.49 implies a valuation ratio of 38.3x forward P/E. Read our free research report to see why you should think twice about including CORT in your portfolio.
Insperity (NSP)
Net Cash Position: $132 million (5.4% 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 Are We Hesitant About NSP?
- 4.1% annual revenue growth over the last two years was slower than its business services peers
- Performance over the past five years shows its incremental sales were much less profitable, as its earnings per share fell by 5.7% annually
- Free cash flow margin shrank by 5.2 percentage points over the last five years, suggesting the company is consuming more capital to stay competitive
Insperity is trading at $64.72 per share, or 17.5x forward P/E. Dive into our free research report to see why there are better opportunities than NSP.
One Stock to Watch:
Freshworks (FRSH)
Net Cash Position: $964.7 million (21.4% of Market Cap)
Founded in Chennai, India in 2010 with the idea of creating a “fresh” helpdesk product, Freshworks (NASDAQ: FRSH) offers a broad range of software targeted at small and medium-sized businesses.
Why Do We Like FRSH?
- ARR growth averaged 20.2% over the last year, showing customers are willing to take multi-year bets on its offerings
- Superior software functionality and low servicing costs are reflected in its top-tier gross margin of 84.4%
- Operating margin improvement of 9.2 percentage points over the last year demonstrates its ability to scale efficiently
At $15.28 per share, Freshworks trades at 5.5x forward price-to-sales. Is now the right time to buy? Find out 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 5 Growth Stocks for this month. 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-small-cap company Exlservice (+354% five-year return). Find your next big winner with StockStory today for free.