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 balances growth with stability and two that may struggle.
Two Stocks to Sell:
Kratos (KTOS)
Net Cash Position: $418.2 million (2.5% of Market Cap)
Established with a commitment to supporting national security, Kratos (NASDAQ: KTOS) is a provider of advanced engineering, technology, and security solutions tailored for critical national security applications.
Why Are We Hesitant About KTOS?
- Operating margin of 2.1% decreased from an already low base, demonstrating the tradeoff between growth and profitability
- 8.8 percentage point decline in its free cash flow margin over the last five years reflects the company’s increased investments to defend its market position
- Underwhelming 1.3% return on capital reflects management’s difficulties in finding profitable growth opportunities
Kratos is trading at $89.55 per share, or 114.6x forward P/E. To fully understand why you should be careful with KTOS, check out our full research report (it’s free).
StoneX (SNEX)
Net Cash Position: $13.2 billion (239% of Market Cap)
Originally known as INTL FCStone until its 2020 rebranding, StoneX Group (NASDAQ: SNEX) provides a global financial services network connecting companies, traders, and investors to markets through clearing, execution, and advisory services.
Why Does SNEX Give Us Pause?
- Annual earnings per share growth of 1.7% underperformed its revenue over the last five years, showing its incremental sales were less profitable
- Annual tangible book value per share growth of 6.6% over the last two years lagged behind its financials peers as its large balance sheet made it difficult to generate incremental capital growth
- High debt-to-equity ratio of 7.8× shows the firm carries too much debt relative to shareholder equity, increasing bankruptcy risk
StoneX’s stock price of $105.14 implies a valuation ratio of 1.9x forward P/E. Dive into our free research report to see why there are better opportunities than SNEX.
One Stock to Buy:
Bowhead Specialty (BOW)
Net Cash Position: $85.91 million (11.7% of Market Cap)
Named after the Arctic bowhead whale known for navigating challenging waters, Bowhead Specialty Holdings (NYSE: BOW) is a specialty insurance company that provides customized coverage for complex and high-risk commercial sectors.
Why Are We Backing BOW?
- Market penetration was impressive this cycle as its net premiums earned expanded by 36.5% annually over the last two years
- Earnings per share grew by 28.9% annually over the last three years and trumped its peers
- Balance sheet strength has increased this cycle as its 30.9% annual book value per share growth over the last two years was exceptional
At $22.44 per share, Bowhead Specialty trades at 1.4x forward P/B. Is now the right time to buy? See for yourself in our full research report, it’s free.
Stocks We Like Even More
ONE MORE THING: Top 5 Growth Stocks. The biggest stock winners almost always had one thing in common before they ran. Revenue growing like crazy. Meta. CrowdStrike. Broadcom. Our AI flagged all three. They returned 315%, 314%, and 455%, respectively.
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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-small-cap company Comfort Systems (+782% five-year return). Find your next big winner with StockStory today.
