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.
Not all businesses with cash are winners, and that’s why we built StockStory - to help you separate the good from the bad. 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:
Photronics (PLAB)
Net Cash Position: $639.6 million (32.3% of Market Cap)
Sporting a global footprint of facilities, Photronics (NASDAQ: PLAB) is a manufacturer of photomasks, templates used to transfer patterns onto semiconductor wafers.
Why Are We Wary of PLAB?
- Sales tumbled by 2% annually over the last two years, showing market trends are working against its favor during this cycle
- Demand will likely be soft over the next 12 months as Wall Street’s estimates imply tepid growth of 3.1%
- Gross margin of 35.7% is below its competitors, leaving less money to invest in areas like marketing and R&D
Photronics’s stock price of $33.13 implies a valuation ratio of 2.2x trailing 12-month price-to-sales. If you’re considering PLAB for your portfolio, see our FREE research report to learn more.
The Honest Company (HNST)
Net Cash Position: $84.66 million (27.5% of Market Cap)
Co-founded by actress Jessica Alba, The Honest Company (NASDAQ: HNST) sells diapers and wipes, skin care products, and household cleaning products.
Why Should You Dump HNST?
- Lackluster 5.8% annual revenue growth over the last three years indicates the company is losing ground to competitors
- Revenue base of $371.3 million puts it at a disadvantage compared to larger competitors exhibiting economies of scale
- Negative returns on capital show that some of its growth strategies have backfired
At $2.76 per share, The Honest Company trades at 29.5x forward P/E. To fully understand why you should be careful with HNST, check out our full research report (it’s free).
One Stock to Buy:
GitLab (GTLB)
Net Cash Position: $1.26 billion (32.6% of Market Cap)
With its all-remote workforce pioneering a new approach to software development, GitLab (NASDAQ: GTLB) provides a single-application DevSecOps platform that helps development, operations, and security teams collaborate to build, secure, and deploy software faster.
Why Is GTLB a Good Business?
- ARR growth averaged 26.4% over the last year, showing customers are willing to take multi-year bets on its software
- Net revenue retention rate of 120% shows the company enjoys some degree of customer loyalty
- Superior software functionality and low servicing costs result in a best-in-class gross margin of 87.4%
GitLab is trading at $22.72 per share, or 3.5x forward price-to-sales. Is now a good time to buy? See for yourself in our in-depth 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.
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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.
