A clean balance sheet can signal disciplined management and stability. It also means a company can expand and thrive without relying on borrowed capital.
Not all companies with sound capital structures are created equal, and StockStory is here to help you find the best. Keeping that in mind, here are three companies with net cash positions that can leverage their balance sheets to grow.
ServiceNow (NOW)
Net Cash Position: $2.75 billion (2.6% of Market Cap)
Built on a single code base that processes more than 80 billion workflows and 6.5 trillion transactions annually, ServiceNow (NYSE: NOW) provides a cloud-based platform that helps organizations automate and digitize workflows across departments, from IT and HR to customer service and security.
Why Will NOW Outperform?
- ARR growth averaged 21.8% over the last year, showing customers are willing to take multi-year bets on its software
- Fast payback periods on sales and marketing expenses allow the company to invest heavily and onboard many customers concurrently
- Robust free cash flow margin of 34.6% gives it many options for capital deployment
At $101.70 per share, ServiceNow trades at 6.3x forward price-to-sales. Is now the right time to buy? Find out in our full research report, it’s free.
Palo Alto Networks (PANW)
Net Cash Position: $4.16 billion (2% 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 Do We Watch PANW?
- Projected revenue growth of 28.3% for the next 12 months is above its two-year trend, pointing to accelerating demand
- Software platform has product-market fit given the rapid recovery of its customer acquisition costs
- Strong free cash flow margin of 36% enables it to reinvest or return capital consistently
Palo Alto Networks is trading at $260.07 per share, or 14.6x forward price-to-sales. Is now the time to initiate a position? See for yourself in our in-depth research report, it’s free.
MercadoLibre (MELI)
Net Cash Position: $4.77 billion (5.7% of Market Cap)
Originally started as an online auction platform, MercadoLibre (NASDAQ: MELI) is a one-stop e-commerce marketplace and fintech platform in Latin America.
Why Is MELI a Top Pick?
- Customers are spending more money on its platform as its average revenue per user has increased by 77.7% annually over the last two years
- Performance over the past three years was turbocharged by share buybacks, which enabled its earnings per share to grow faster than its revenue
- Impressive free cash flow profitability enables the company to fund new investments or reward investors with share buybacks/dividends, and its rising cash conversion increases its margin of safety
MercadoLibre’s stock price of $1,664 implies a valuation ratio of 18.7x forward EV/EBITDA. Is now a good time to buy? Find out in our full research report, it’s free.
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