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.
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. That said, here is one company with a net cash position that can leverage its balance sheet to grow and two best left off your watchlist.
Two Stocks to Sell:
Ruger (RGR)
Net Cash Position: $116.5 million (18.7% of Market Cap)
Founded in 1949, Ruger (NYSE: RGR) is an American manufacturer of firearms for the commercial sporting market.
Why Should You Sell RGR?
- Products and services aren’t resonating with the market as its revenue declined by 3.8% annually over the last five years
- Low free cash flow margin of 8% for the last two years gives it little breathing room, constraining its ability to self-fund growth or return capital to shareholders
- Eroding returns on capital from an already low base indicate that management’s recent investments are destroying value
At $38.31 per share, Ruger trades at 19.9x forward P/E. Read our free research report to see why you should think twice about including RGR in your portfolio.
SoundHound AI (SOUN)
Net Cash Position: $209.4 million (7.9% of Market Cap)
Born from the idea that machines should understand human speech as naturally as people do, SoundHound AI (NASDAQ: SOUN) develops voice recognition and conversational intelligence technology that enables businesses to integrate voice assistants into their products and services.
Why Is SOUN Not Exciting?
- Gross margin of 40.6% is way below its competitors, leaving less money to invest in areas like marketing and R&D
- Customer acquisition costs take a while to recoup, making it difficult to justify sales and marketing investments that could increase revenue
- Negative free cash flow raises questions about the return timeline for its investments
SoundHound AI is trading at $6.15 per share, or 9.8x forward price-to-sales. Check out our free in-depth research report to learn more about why SOUN doesn’t pass our bar.
One Stock to Buy:
Nubank (NU)
Net Cash Position: $7.82 billion (11.2% of Market Cap)
With well over one hundred million customers across Brazil, Mexico, and Colombia through its viral member-get-member referral program, Nubank (NYSE: NU) is a digital banking platform that offers financial services including spending, saving, investing, borrowing, and protection products to millions of customers across Latin America.
Why Will NU Beat the Market?
- Annual revenue growth of 40.6% over the last two years was superb and indicates its market share increased during this cycle
- Performance over the past two years shows its incremental sales were extremely profitable, as its annual earnings per share growth of 53% outpaced its revenue gains
- Industry-leading 14% return on equity demonstrates management’s skill in finding high-return investments
Nubank’s stock price of $14.47 implies a valuation ratio of 15.3x forward P/E. Is now a good time to buy? See for yourself in our full research report, it’s free.
Stocks We Like Even More
ALSO WORTH WATCHING: Top 5 Momentum Stocks. The best time to own a great stock is when the market is finally noticing it. These aren’t just high-quality businesses. Something is happening with them right now. Elite fundamentals meet near-term momentum — both boxes checked at the same time.
Find out which stocks our AI platform is flagging this week. See this week’s Strong Momentum stocks — FREE. Get Our Strong Momentum Stocks for Free HERE.
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.
