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. 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:
Palo Alto Networks (PANW)
Net Cash Position: $1.04 billion (0.4% of Market Cap)
Founded in 2005 by security visionary Nir Zuk who sought to reimagine firewall technology, Palo Alto Networks (NASDAQ: PANW) provides AI-powered cybersecurity platforms that protect organizations' networks, clouds, and endpoints from sophisticated threats.
Why Does PANW Fall Short?
- Steep infrastructure costs and weaker unit economics for a software company are reflected in its low gross margin of 72%
- Customer acquisition costs take a while to recoup, making it difficult to justify sales and marketing investments that could increase revenue
- Day-to-day expenses have swelled relative to revenue over the last year as its operating margin fell by 1.5 percentage points
Palo Alto Networks’s stock price of $323.80 implies a valuation ratio of 20.1x forward price-to-sales. Dive into our free research report to see why there are better opportunities than PANW.
NVR (NVR)
Net Cash Position: $112.2 million (0.7% of Market Cap)
Known for its unique land acquisition strategy, NVR (NYSE: NVR) is a respected homebuilder and mortgage company in the United States.
Why Is NVR Risky?
- Products and services are facing significant end-market challenges during this cycle as sales have declined by 2.1% annually over the last two years
- Earnings per share decreased by more than its revenue over the last two years, showing each sale was less profitable
- Waning returns on capital imply its previous profit engines are losing steam
At $6,150 per share, NVR trades at 16.2x forward P/E. Check out our free in-depth research report to learn more about why NVR doesn’t pass our bar.
One Stock to Watch:
Veeva Systems (VEEV)
Net Cash Position: $7.21 billion (24.7% of Market Cap)
Originally named "Verticals onDemand" before rebranding in 2009, Veeva Systems (NYSE: VEEV) provides cloud software, data solutions, and consulting services that help life sciences companies develop and bring products to market more efficiently.
Why Do We Like VEEV?
- Software platform has product-market fit given the rapid recovery of its customer acquisition costs
- Highly efficient business model is illustrated by its impressive 28.8% operating margin, and it turbocharged its profits by achieving some fixed cost leverage
- Strong free cash flow margin of 49.4% enables it to reinvest or return capital consistently
Veeva Systems is trading at $179.25 per share, or 8.2x forward price-to-sales. Is now the right time to buy? Find out in our full research report, it’s free.
Stocks We Like Even More
WHILE YOU’RE HERE: Top 9 Market-Beating Stocks. The best stocks don’t just beat the market once. They do it again. And again. Robust revenue growth, rising free cash flow, returns on capital that leave their competition in the dust. The market has already rewarded these businesses.
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Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Kadant (+214% between June 2020 and June 2025). Find your next big winner with StockStory today.
