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.
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 is one company with a net cash position that can continue growing sustainably and two best left off your watchlist.
Two Stocks to Sell:
Teradyne (TER)
Net Cash Position: $439 million (2.9% of Market Cap)
Sporting most major chip manufacturers as its customers, Teradyne (NASDAQ: TER) is a US-based supplier of automated test equipment for semiconductors as well as other technologies and devices.
Why Are We Cautious About TER?
- Annual revenue growth of 3% over the last five years was below our standards for the semiconductor sector
- Anticipated sales growth of 2.6% for the next year implies demand will be shaky
- Expenses have increased as a percentage of revenue over the last five years as its operating margin fell by 7.9 percentage points
Teradyne’s stock price of $92.60 implies a valuation ratio of 25.7x forward P/E. To fully understand why you should be careful with TER, check out our full research report (it’s free).
Perma-Fix (PESI)
Net Cash Position: $23.46 million (11.3% of Market Cap)
Tackling hazardous waste challenges since 1990, Perma-Fix (NASDAQ: PESI) provides environmental waste treatment services.
Why Do We Pass on PESI?
- Annual sales declines of 7.3% for the past five years show its products and services struggled to connect with the market during this cycle
- Shrinking returns on capital from an already weak position reveal that neither previous nor ongoing investments are yielding the desired results
- Depletion of cash reserves could lead to a fundraising event that triggers shareholder dilution
At $11.22 per share, Perma-Fix trades at 103.2x forward EV-to-EBITDA. Dive into our free research report to see why there are better opportunities than PESI.
One Stock to Watch:
RLI (RLI)
Net Cash Position: $100.9 million (1.5% of Market Cap)
Founded in 1965 and named after its original focus on "replacement lens insurance" for contact lens wearers, RLI (NYSE: RLI) is a specialty insurance company that underwrites property, casualty, and surety products through wholesale brokers, independent agents, and carrier partnerships.
Why Should RLI Be on Your Watchlist?
- Annual net premiums earned growth of 15% over the last two years was superb and indicates its market share increased during this cycle
- Impressive 11.4% annual book value per share growth over the last five years indicates it’s building equity value this cycle
- Stellar return on equity showcases management’s ability to surface highly profitable business ventures
RLI is trading at $71.50 per share, or 4x forward P/B. Is now the time to initiate a position? See for yourself in our comprehensive research report, it’s free.
High-Quality Stocks for All Market Conditions
The market surged in 2024 and reached record highs after Donald Trump’s presidential victory in November, but questions about new economic policies are adding much uncertainty for 2025.
While the crowd speculates what might happen next, we’re homing in on the companies that can succeed regardless of the political or macroeconomic environment. Put yourself in the driver’s seat and build a durable portfolio 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-small-cap company Comfort Systems (+782% 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
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