A surplus of cash can mean financial stability, but it can also indicate a reluctance (or inability) to invest in growth. Some of these companies also face challenges like stagnating revenue, declining market share, or limited scalability.
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 continue growing sustainably and two with hidden risks.
Two Stocks to Sell:
Power Integrations (POWI)
Net Cash Position: $262.6 million (9.5% of Market Cap)
A leading supplier of parts for electronics such as home appliances, Power Integrations (NASDAQ: POWI) is a semiconductor designer and developer specializing in products used for high-voltage power conversion.
Why Is POWI Risky?
- Annual sales declines of 6.4% for the past five years show its products and services struggled to connect with the market during this cycle
- Overall productivity fell over the last five years as its plummeting sales were accompanied by a decline in its operating margin
- Earnings per share decreased by more than its revenue over the last five years, showing each sale was less profitable
Power Integrations is trading at $49.34 per share, or 30.1x forward P/E. If you’re considering POWI for your portfolio, see our FREE research report to learn more.
Leonardo DRS (DRS)
Net Cash Position: $121 million (1.2% of Market Cap)
Developing submarine detection systems for the U.S. Navy, Leonardo DRS (NASDAQ: DRS) is a provider of defense systems, electronics, and military support services.
Why Are We Hesitant About DRS?
- Sales trends were unexciting over the last five years as its 5.6% annual growth was below the typical industrials company
- Sales pipeline suggests its future revenue growth won’t meet our standards as its backlog averaged 6.8% declines over the past two years
- Waning returns on capital imply its previous profit engines are losing steam
Leonardo DRS’s stock price of $37.91 implies a valuation ratio of 28x forward P/E. Read our free research report to see why you should think twice about including DRS in your portfolio.
One Stock to Buy:
Happen Bank (HAPN)
Net Cash Position: $910.3 million (48.7% of Market Cap)
Pioneering peer-to-peer lending in the US before evolving into a digital bank, Happen Bank (NASDAQ: HAPN) operates a marketplace that connects borrowers with lenders, offering personal loans, auto refinancing, and banking services.
Why Should You Buy HAPN?
- Annual revenue growth of 18.1% over the last five years was superb and indicates its market share increased during this cycle
- Additional sales over the last two years increased its profitability as the 108% annual growth in its earnings per share outpaced its revenue
- Management team has demonstrated it can invest in profitable ventures through its 12% five-year return on equity
At $16.56 per share, Happen Bank trades at 8.2x forward P/E. Is now the right time to buy? See for yourself in our in-depth research report, it’s free.
Stocks We Like Even More
WHILE YOU’RE HERE: Top 9 Market-Beating Stocks. The best stocks don’t just beat the market once. They do it again. And again. Robust revenue growth, rising free cash flow, returns on capital that leave their competition in the dust. The market has already rewarded these businesses.
But our AI platform says the party isn’t over. Find out which 9 stocks made the cut this week — FREE. Get Our Top 9 Market-Beating Stocks for Free HERE.
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Tecnoglass (+1,552% between June 2020 and June 2025). Find your next big winner with StockStory today.
