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.
Financial flexibility is valuable, but it’s not everything - at StockStory, we help you find the stocks that can not only survive but also outperform. Keeping that in mind, here are two companies with net cash positions that can continue growing sustainably and one with hidden risks.
One Stock to Sell:
Employers Holdings (EIG)
Net Cash Position: $6.9 million (0.6% of Market Cap)
With roots in Nevada and a strong concentration in California where 45% of its premiums are generated, Employers Holdings (NYSE:EIG) is a specialty provider of workers' compensation insurance focused on small and select businesses engaged in low-to-medium hazard industries across the United States.
Why Do We Avoid EIG?
- Annual net premiums earned growth of 3.5% over the last two years was below our standards for the insurance sector
- Expenses have increased as a percentage of revenue over the last four years as its combined ratio degraded by 6.5 percentage points
- Earnings per share lagged its peers over the last two years as they only grew by 10.8% annually
Employers Holdings is trading at $47.77 per share, or 1x forward P/B. Read our free research report to see why you should think twice about including EIG in your portfolio.
Two Stocks to Watch:
Lam Research (LRCX)
Net Cash Position: $966.4 million (0.8% of Market Cap)
Founded in 1980 by David Lam, the man who pioneered semiconductor etching technology, Lam Research (NASDAQ:LRCX) is one of the leading providers of wafer fabrication equipment used to make semiconductors.
Why Could LRCX Be a Winner?
- Highly efficient business model is illustrated by its impressive 29.6% operating margin, and it turbocharged its profits by achieving some fixed cost leverage
- Strong free cash flow margin of 26.6% enables it to reinvest or return capital consistently, and its improved cash conversion implies it’s becoming a less capital-intensive business
- Stellar returns on capital showcase management’s ability to surface highly profitable business ventures
At $98.59 per share, Lam Research trades at 26.1x forward P/E. Is now the time to initiate a position? Find out in our full research report, it’s free.
Medpace (MEDP)
Net Cash Position: $291.1 million (3.2% of Market Cap)
Founded in 1992 as a scientifically-driven alternative to traditional contract research organizations, Medpace (NASDAQ:MEDP) provides outsourced clinical trial management and research services to help pharmaceutical, biotechnology, and medical device companies develop new treatments.
Why Do We Like MEDP?
- Average organic revenue growth of 17.8% over the past two years demonstrates its ability to expand independently without relying on acquisitions
- Share repurchases have amplified shareholder returns as its annual earnings per share growth of 35.1% exceeded its revenue gains over the last five years
- Rising returns on capital show management is finding more attractive investment opportunities
Medpace’s stock price of $320 implies a valuation ratio of 25.7x forward P/E. Is now a good time to buy? See for yourself in our comprehensive research report, it’s free.
Stocks We Like Even More
Market indices reached historic highs following Donald Trump’s presidential victory in November 2024, but the outlook for 2025 is clouded by new trade policies that could impact business confidence and growth.
While this has caused many investors to adopt a "fearful" wait-and-see approach, we’re leaning into our best ideas that can grow regardless of the political or macroeconomic climate. Take advantage of Mr. Market by checking out our Top 6 Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 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 for free. Find your next big winner with StockStory today. Find your next big winner with StockStory today