A cash-heavy balance sheet is often a sign of strength, but not always. Some companies avoid debt because they have weak business models, limited expansion opportunities, or inconsistent cash flow.
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 balance growth with stability and one that may struggle.
One stock to sell:
Dolby Laboratories (DLB)
Net cash position: $692.1 million (11.9% of Market Cap)
Known for its iconic "D" logo that appears before countless movies and TV shows, Dolby Laboratories (NYSE: DLB) designs and licenses audio and video technologies that enhance entertainment experiences in movies, TV shows, music, and other media.
Why Should You Sell DLB?
- Muted 1.3% annual revenue growth over the last five years shows its demand lagged behind its software peers
- Competitive market means the company must spend more on sales and marketing to stand out even if the return on investment is low
- Costs have risen faster than its revenue over the last year, causing its operating margin to decline by 3.3 percentage points
Dolby Laboratories is trading at $61.78 per share, or 4.1x forward price-to-sales. Dive into our free research report to see why there are better opportunities than DLB.
Two stocks to watch:
DoorDash (DASH)
Net cash position: $2.68 billion (3.4% of Market Cap)
Founded by Stanford students with the intent to build “the local, on-demand FedEx", DoorDash (NASDAQ: DASH) operates an on-demand food delivery platform.
Why Should You Buy DASH?
- Orders have grown by 24.1% annually, allowing for more profitable cross-selling opportunities if it can build complementary products and features
- Excellent EBITDA margin of 20.5% highlights the efficiency of its business model, and its operating leverage amplified its profits over the last few years
- Performance over the past three years shows its incremental sales were extremely profitable, as its annual earnings per share growth of 60.5% outpaced its revenue gains
At $177.15 per share, DoorDash trades at 16.5x forward EV/EBITDA. Is now a good time to buy? Find out in our full research report, it’s free.
Blink Charging (BLNK)
Net cash position: $30.84 million (53.1% of Market Cap)
One of the first EV charging companies to go public, Blink Charging (NASDAQ: BLNK) is a manufacturer, owner, operator, and provider of electric vehicle charging equipment and networked EV charging services.
Why Do We Like BLNK?
- Adequate gross margin of 32.5% gives it sufficient room to spend on marketing and product development
- Earnings growth has massively outpaced its peers over the last two years as its EPS has compounded at 35.7% annually
Blink Charging’s stock price of $0.41 implies a valuation ratio of 0.6x forward price-to-sales. Is now the time to initiate a position? See for yourself in our comprehensive research report, it’s free.
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