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 is one company with a net cash position that can leverage its balance sheet to grow and two with hidden risks.
Two Stocks to Sell:
nCino (NCNO)
Net Cash Position: $115.8 million (3.6% of Market Cap)
Founded in 2011 in North Carolina, nCino (NASDAQ:NCNO) makes cloud-based operating systems for banks and provides that software-as-a-service.
Why Are We Hesitant About NCNO?
- Estimated sales growth of 5.9% for the next 12 months implies demand will slow from its three-year trend
- Steep infrastructure costs and weaker unit economics for a software company are reflected in its low gross margin of 60.1%
- Persistent operating margin losses suggest the business manages its expenses poorly
nCino’s stock price of $28.29 implies a valuation ratio of 5.5x forward price-to-sales. If you’re considering NCNO for your portfolio, see our FREE research report to learn more.
ScanSource (SCSC)
Net Cash Position: $4.34 million (0.5% of Market Cap)
Operating as a crucial link in the technology supply chain since 1992, ScanSource (NASDAQ:SCSC) is a hybrid distributor that connects hardware, software, and cloud services from technology suppliers to resellers and business customers.
Why Do We Steer Clear of SCSC?
- Annual sales declines of 1.5% for the past five years show its products and services struggled to connect with the market during this cycle
- Falling earnings per share over the last two years has some investors worried as stock prices ultimately follow EPS over the long term
- Underwhelming 8.2% return on capital reflects management’s difficulties in finding profitable growth opportunities
At $38.84 per share, ScanSource trades at 10.5x forward P/E. Check out our free in-depth research report to learn more about why SCSC doesn’t pass our bar.
One Stock to Watch:
Braze (BRZE)
Net Cash Position: $452 million (14.6% of Market Cap)
Founded in 2011 after the co-founders met at NYC Disrupt Hackathon, Braze (NASDAQ:BRZE) is a customer engagement software platform that allows brands to connect with customers through data-driven and contextual marketing campaigns.
Why Could BRZE Be a Winner?
- Ability to secure long-term commitments with customers is evident in its 23.1% ARR growth over the last year
- Forecasted revenue growth of 18.5% for the next 12 months indicates its momentum over the last three years is sustainable
- Operating profits and efficiency rose over the last year as it benefited from some fixed cost leverage
Braze is trading at $28.19 per share, or 4x forward price-to-sales. Is now the time to initiate a position? Find out in our full research report, it’s free.
High-Quality Stocks for All Market Conditions
When Trump unveiled his aggressive tariff plan in April 2024, markets tanked as investors feared a full-blown trade war. But those who panicked and sold missed the subsequent rebound that’s already erased most losses.
Don’t let fear keep you from great opportunities and take a look at 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 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
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