Companies with more cash than debt can be financially resilient, but that doesn’t mean they’re all strong investments. Some lack leverage because they struggle to grow or generate consistent profits, making them unattractive borrowers.
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. 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:
nLIGHT (LASR)
Net Cash Position: $117.4 million (3.4% of Market Cap)
Founded by a former CEO and Harvard-educated entrepreneur Scott Keeneyn, nLIGHT (NASDAQ: LASR) offers semiconductor and fiber lasers to the industrial, aerospace & defense, and medical sectors.
Why Are We Hesitant About LASR?
- Annual revenue growth of 3.2% over the last five years was below our standards for the industrials sector
- Negative free cash flow raises questions about the return timeline for its investments
- Waning returns on capital from an already weak starting point displays the inefficacy of management’s past and current investment decisions
nLIGHT’s stock price of $62.56 implies a valuation ratio of 202.3x forward P/E. Read our free research report to see why you should think twice about including LASR in your portfolio.
Employers Holdings (EIG)
Net Cash Position: $65.3 million (8.5% of Market Cap)
With roots in Nevada and a strong concentration in California where 45% of its premiums are generated, Employers Holdings (NYSE: EIG) is a specialty provider of workers' compensation insurance focused on small and select businesses engaged in low-to-medium hazard industries across the United States.
Why Do We Avoid EIG?
- 2.7% annualized net premiums earned growth over the last two years lagged behind its insurance peers
- Expenses have increased as a percentage of revenue over the last five years as its pre-tax profit margin fell by 19.4 percentage points
- Incremental sales over the last five years were much less profitable as its earnings per share fell by 21.9% annually while its revenue grew
Employers Holdings is trading at $39.45 per share, or 0.8x forward P/B. To fully understand why you should be careful with EIG, check out our full research report (it’s free).
One Stock to Watch:
Inspire Medical Systems (INSP)
Net Cash Position: $276.1 million (16.6% of Market Cap)
Offering an alternative for the millions who struggle with traditional CPAP machines, Inspire Medical Systems (NYSE: INSP) develops and sells an implantable neurostimulation device that treats obstructive sleep apnea by stimulating nerves to keep airways open during sleep.
Why Could INSP Be a Winner?
- Impressive 51.2% annual revenue growth over the last five years indicates it’s winning market share this cycle
- Earnings growth has trumped its peers over the last five years as its EPS has compounded at 25.9% annually
- Free cash flow margin jumped by 19.2 percentage points over the last five years, giving the company more resources to pursue growth initiatives, repurchase shares, or pay dividends
At $58.70 per share, Inspire Medical Systems trades at 30.2x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free.
Stocks We Like Even More
ALSO WORTH WATCHING: Top 5 Momentum Stocks. The best time to own a great stock is when the market is finally noticing it. These aren't just high-quality businesses. Something is happening with them right now. Elite fundamentals meeting near-term momentum — both boxes checked at the same time.
Find out which stocks our AI platform is flagging this week. See this week's Strong Momentum stocks — FREE. Get Our Strong Momentum Stocks for Free HERE.
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,326% between June 2020 and June 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.
