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.

Just because a business has cash doesn’t mean it’s a good investment. Luckily, StockStory is here to help you separate the winners from the losers. Keeping that in mind, 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:

Qualys (QLYS)

Net Cash Position: $419.1 million (10.9% of Market Cap)

Originally developed to address the growing complexity of IT security in the cloud era, Qualys (NASDAQ: QLYS) provides a cloud-based platform that helps organizations identify, manage, and protect their IT assets from cyber threats across on-premises, cloud, and mobile environments.

Why Does QLYS Give Us Pause?

1. Average billings growth of 9.1% over the last year was subpar, suggesting it struggled to push its software and might have to lower prices to stimulate demand
2. Estimated sales growth of 7.7% for the next 12 months implies demand will slow from its two-year trend
3. Operating margin improvement of 2.5 percentage points over the last year demonstrates its ability to scale efficiently

Qualys is trading at $109.52 per share, or 4.9x forward price-to-sales. Check out our free in-depth research report to learn more about why QLYS doesn’t pass our bar.

Two Stocks to Buy:

Reddit (RDDT)

Net Cash Position: $2.75 billion (8.1% of Market Cap)

Founded in 2005 by two University of Virginia roommates, Reddit (NYSE: RDDT) facilitates user-generated content across niche communities (called subreddits) that discuss anything from stocks to dating and memes.

Why Will RDDT Outperform?

1. Domestic Daily Active Visitors are rising, meaning the company can increase revenue without incurring additional customer acquisition costs if it can cross-sell additional products and features
2. Grip over its ecosystem is highlighted by its ability to grow engagement while increasing the average revenue per user by 34.8% annually
3. Strong free cash flow margin of 30.1% enables it to reinvest or return capital consistently, and its recently improved profitability means it has even more resources to invest or distribute

At $175.55 per share, Reddit trades at 20.5x forward EV/EBITDA. Is now the right time to buy? See for yourself in our in-depth research report, it’s free.

HCI Group (HCI)

Net Cash Position: $950.1 million (48.3% of Market Cap)

Starting as a Florida "take-out" insurer that assumed policies from the state-backed Citizens Property Insurance Corporation, HCI Group (NYSE: HCI) provides property and casualty insurance, primarily homeowners coverage, while leveraging proprietary technology to improve underwriting and claims processing.

Why Is HCI a Top Pick?

1. Market penetration was impressive this cycle as its net premiums earned expanded by 21.1% annually over the last two years
2. Incremental sales significantly boosted profitability as its annual earnings per share growth of 54.9% over the last two years outstripped its revenue performance
3. Balance sheet strength has increased this cycle as its 48.1% annual book value per share growth over the last two years was exceptional

HCI Group’s stock price of $153.99 implies a valuation ratio of 1.6x forward P/B. Is now the time to initiate a position? Find out in our full research report, it’s free.

High-Quality Stocks for All Market Conditions

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 meet 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.