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. That said, here are two companies with net cash positions that can leverage their balance sheets to grow and one best left off your watchlist.
One Stock to Sell:
Scorpio Tankers (STNG)
Net Cash Position: $1.11 billion (32% of Market Cap)
Operating one of the youngest fleets in the industry, Scorpio Tankers (NYSE: STNG) is an international provider of marine transportation services, specializing in the shipment of refined petroleum.
Why Are We Hesitant About STNG?
- Sluggish trends in its total vessels suggest customers aren’t adopting its solutions as quickly as the company hoped
- Forecasted revenue decline of 25.4% for the upcoming 12 months implies demand will fall even further
- Earnings per share have contracted by 6% annually over the last two years, a headwind for returns as stock prices often echo long-term EPS performance
At $76.15 per share, Scorpio Tankers trades at 10.7x forward P/E. Read our free research report to see why you should think twice about including STNG in your portfolio.
Two Stocks to Watch:
Toast (TOST)
Net Cash Position: $1.68 billion (8.6% of Market Cap)
Born from the frustrations of three friends waiting too long for their restaurant bill, Toast (NYSE: TOST) provides a cloud-based digital technology platform with software, payment processing, and hardware solutions built specifically for restaurants.
Why Are We Positive on TOST?
- Ability to secure long-term commitments with customers is evident in its 26.5% ARR growth over the last year
- Sales outlook for the upcoming 12 months implies the business will stay on its desirable two-year growth trajectory
Toast is trading at $34.10 per share, or 2.5x forward price-to-sales. Is now the time to initiate a position? See for yourself in our comprehensive research report, it’s free.
Blink Charging (BLNK)
Net Cash Position: $30.84 million (36% of Market Cap)
One of the first EV charging companies to go public, Blink Charging (NASDAQ: BLNK) is a manufacturer, owner, operator, and provider of electric vehicle charging equipment and networked EV charging services.
Why Do We Like BLNK?
- Gross margin of 32.5% is reasonable for the industry and allows for steady investments in marketing and R&D
- Earnings growth has massively outpaced its peers over the last two years as its EPS has compounded at 35.7% annually
Blink Charging’s stock price of $0.59 implies a valuation ratio of 0.9x forward price-to-sales. Is now a good time to buy? Find out in our full research report, it’s free.
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