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. Keeping that in mind, here are three companies with net cash positions that don’t make the cut and some better choices instead.
nLIGHT (LASR)
Net Cash Position: $104.5 million (4.9% of Market Cap)
Founded by a former CEO and Harvard-educated entrepreneur Scott Keeneyn, nLIGHT (NASDAQ: LASR) offers semiconductor and fiber lasers to the industrial, aerospace & defense, and medical sectors.
Why Do We Pass on LASR?
- Annual revenue growth of 2.6% over the last five years was below our standards for the industrials sector
- Long-term business health is up for debate as its cash burn has increased over the last five years
- Waning returns on capital from an already weak starting point displays the inefficacy of management’s past and current investment decisions
At $41.97 per share, nLIGHT trades at 146.6x forward P/E. Dive into our free research report to see why there are better opportunities than LASR.
Zevia (ZVIA)
Net Cash Position: $25.2 million (20.8% of Market Cap)
With a primary focus on soda but also a presence in energy drinks and teas, Zevia (NYSE: ZVIA) is a better-for-you beverage company.
Why Does ZVIA Fall Short?
- Sales stagnated over the last three years and signal the need for new growth strategies
- Modest revenue base of $162.8 million gives it less fixed cost leverage and fewer distribution channels than larger companies
- Poor expense management has led to operating margin losses
Zevia is trading at $1.86 per share, or 177.7x forward EV-to-EBITDA. To fully understand why you should be careful with ZVIA, check out our full research report (it’s free).
Banner Bank (BANR)
Net Cash Position: $537.8 million (24.7% of Market Cap)
Founded in 1890 in Walla Walla, Washington, and evolving through more than a century of economic cycles, Banner Corporation (NASDAQ: BANR) operates Banner Bank, providing commercial banking services, loans, and financial products to individuals and businesses across Washington, Oregon, California, Idaho, and Utah.
Why Do We Think Twice About BANR?
- Annual net interest income growth of 3.7% over the last five years was below our standards for the banking sector
- Sales over the last two years were less profitable as its earnings per share fell by 6.1% annually while its revenue was flat
- Estimated tangible book value per share growth of 9.4% for the next 12 months implies profitability will slow from its two-year trend
Banner Bank’s stock price of $63.91 implies a valuation ratio of 1.1x forward P/B. Read our free research report to see why you should think twice about including BANR in your portfolio.
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