A cash-heavy balance sheet is often a sign of strength, but not always. Some companies avoid debt because they have weak business models, limited expansion opportunities, or inconsistent cash flow.
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 are two companies with net cash positions that can leverage their balance sheets to grow and one that may struggle.
One Stock to Sell:
Amplitude (AMPL)
Net Cash Position: $203.7 million (13.7% of Market Cap)
Born out of a failed voice recognition startup by founder Spenser Skates, Amplitude (NASDAQ:AMPL) is data analytics software helping companies improve and optimize their digital products.
Why Does AMPL Fall Short?
- Offerings struggled to generate meaningful interest as its average billings growth of 8.7% over the last year did not impress
- Suboptimal cost structure is highlighted by its history of operating margin losses
- Lacking free cash flow generation means it has few chances to reinvest for growth, repurchase shares, or distribute capital
Amplitude is trading at $11.36 per share, or 4.3x forward price-to-sales. Dive into our free research report to see why there are better opportunities than AMPL.
Two Stocks to Watch:
Paychex (PAYX)
Net Cash Position: $737.3 million (1.3% of Market Cap)
One of the oldest service providers in the industry, Paychex (NASDAQ:PAYX) offers its customers payroll and HR software solutions.
Why Do We Like PAYX?
- Estimated revenue growth of 15.5% for the next 12 months implies demand will accelerate from its three-year trend
- Highly efficient business model is illustrated by its impressive 41.5% operating margin
- Robust free cash flow margin of 29.5% gives it many options for capital deployment
At $153 per share, Paychex trades at 8.8x forward price-to-sales. Is now the time to initiate a position? Find out in our full research report, it’s free.
McKesson (MCK)
Net Cash Position: $37 million (0% of Market Cap)
With roots dating back to 1833, making it one of America's oldest continuously operating businesses, McKesson (NYSE:MCK) is a healthcare services company that distributes pharmaceuticals, medical supplies, and provides technology solutions to pharmacies, hospitals, and healthcare providers.
Why Will MCK Outperform?
- 13.9% annual revenue growth over the last two years surpassed the sector average as its offerings resonated with customers
- Unparalleled scale of $359.1 billion in revenue gives it negotiating leverage and staying power in an industry with high barriers to entry
- Share repurchases over the last five years enabled its annual earnings per share growth of 17.2% to outpace its revenue gains
McKesson’s stock price of $728.06 implies a valuation ratio of 19.8x forward P/E. Is now the right time to buy? See for yourself in our comprehensive 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-micro-cap company Kadant (+351% 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