A cash-heavy balance sheet is often a sign of strength, but not always. Some companies avoid debt because they have weak business models, limited expansion opportunities, or inconsistent cash flow.
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 are two companies with net cash positions that can leverage their balance sheets to grow and one best left off your watchlist.
One Stock to Sell:
Grid Dynamics (GDYN)
Net Cash Position: $314 million (28.9% of Market Cap)
With engineering centers across the Americas, Europe, and India serving Fortune 1000 companies, Grid Dynamics (NASDAQ: GDYN) provides technology consulting, engineering, and analytics services to help large enterprises modernize their technology systems and business processes.
Why Does GDYN Fall Short?
- Modest revenue base of $371.2 million gives it less fixed cost leverage and fewer distribution channels than larger companies
- Incremental sales over the last two years were much less profitable as its earnings per share fell by 8.5% annually while its revenue grew
- Negative returns on capital show management lost money while trying to expand the business
Grid Dynamics’s stock price of $12.91 implies a valuation ratio of 32.6x forward P/E. To fully understand why you should be careful with GDYN, check out our full research report (it’s free).
Two Stocks to Watch:
Lyft (LYFT)
Net Cash Position: $1.04 billion (15.4% of Market Cap)
Founded by Logan Green and John Zimmer as a long-distance intercity carpooling company Zimride, Lyft (NASDAQ: LYFT) operates a ridesharing network in the US and Canada.
Why Are We Positive On LYFT?
- Has the opportunity to boost monetization through new features and premium offerings as its active riders have grown by 10.1% annually over the last two years
- Incremental sales significantly boosted profitability as its annual earnings per share growth of 72.9% over the last three years outstripped its revenue performance
- Free cash flow margin increased by 23.3 percentage points over the last few years, giving the company more capital to invest or return to shareholders
At $16.10 per share, Lyft trades at 13.3x forward EV/EBITDA. Is now the time to initiate a position? See for yourself in our full research report, it’s free.
Upwork (UPWK)
Net Cash Position: $253.3 million (12.2% of Market Cap)
Formed through the 2013 merger of Elance and oDesk, Upwork (NASDAQ: UPWK) is an online platform where businesses and independent professionals connect to get work done.
Why Do We Like UPWK?
- Monetization efforts are paying off as its average revenue per customer has grown by 8.3% annually over the last two years
- Performance over the past three years shows its incremental sales were extremely profitable, as its annual earnings per share growth of 395% outpaced its revenue gains
- Free cash flow margin jumped by 27 percentage points over the last few years, giving the company more resources to pursue growth initiatives, repurchase shares, or pay dividends
Upwork is trading at $15.75 per share, or 11.8x forward EV/EBITDA. Is now a good time to buy? Find out in our full research report, it’s free.
Stocks We Like Even More
Donald Trump’s victory in the 2024 U.S. Presidential Election sent major indices to all-time highs, but stocks have retraced as investors debate the health of the economy and the potential impact of tariffs.
While this leaves much uncertainty around 2025, a few companies are poised for long-term gains regardless of the political or macroeconomic climate, like our Top 9 Market-Beating Stocks. This is a curated list of our High Quality stocks that have generated a market-beating return of 176% over the last five years.
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.
