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.
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 that may struggle.
Two Stocks to Sell:
West Pharmaceutical Services (WST)
Net Cash Position: $205.2 million (0.9% of Market Cap)
Founded in 1923 and serving as a critical link in the pharmaceutical supply chain, West Pharmaceutical Services (NYSE: WST) manufactures specialized packaging, containment systems, and delivery devices for injectable drugs and healthcare products.
Why Are We Wary of WST?
- 4.9% annual revenue growth over the last two years was slower than its healthcare peers
- Efficiency has decreased over the last five years as its adjusted operating margin fell by 5.8 percentage points
- Waning returns on capital imply its previous profit engines are losing steam
West Pharmaceutical Services’s stock price of $320.00 implies a valuation ratio of 37.4x forward P/E. Check out our free in-depth research report to learn more about why WST doesn’t pass our bar.
MarketAxess (MKTX)
Net Cash Position: -$103.6 million (-2% of Market Cap)
Pioneering the shift from phone-based to electronic bond trading since 2000, MarketAxess (NASDAQ: MKTX) operates electronic trading platforms that enable institutional investors and broker-dealers to efficiently trade fixed-income securities like corporate and government bonds.
Why Does MKTX Worry Us?
- Annual revenue growth of 4% over the last five years was below our standards for the financials sector
- Earnings per share were flat over the last five years while its revenue grew, showing its incremental sales were less profitable
At $145.26 per share, MarketAxess trades at 18.1x forward P/E. If you’re considering MKTX for your portfolio, see our FREE research report to learn more.
One Stock to Buy:
Watts Water Technologies (WTS)
Net Cash Position: $176.9 million (1.8% of Market Cap)
Founded in 1874, Watts Water (NYSE: WTS) specializes in manufacturing water products and systems for residential, commercial, and industrial applications globally.
Why Do We Love WTS?
- Annual revenue growth of 10.7% over the past five years was outstanding, reflecting market share gains this cycle
- Share buybacks catapulted its annual earnings per share growth to 21.9%, which outperformed its revenue gains over the last five years
- Free cash flow margin increased by 6.1 percentage points over the last five years, giving the company more capital to invest or return to shareholders
Watts Water Technologies is trading at $297.50 per share, or 24.5x forward P/E. Is now the time to initiate a position? See for yourself in our comprehensive 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 Kadant (+351% five-year return). Find your next big winner with StockStory today.
