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. Keeping that in mind, 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:
SmartRent (SMRT)
Net Cash Position: $103.3 million (36.3% of Market Cap)
Founded by an employee at a real estate rental company, SmartRent (NYSE: SMRT) provides smart home devices and software for multifamily residential properties, single-family rental homes, and student housing communities.
Why Are We Hesitant About SMRT?
- Products and services are facing significant end-market challenges during this cycle as sales have declined by 19.8% annually over the last two years
- Flat earnings per share over the last two years lagged its peers
- Negative free cash flow raises questions about the return timeline for its investments
SmartRent’s stock price of $1.48 implies a valuation ratio of 123.3x forward EV-to-EBITDA. Check out our free in-depth research report to learn more about why SMRT doesn’t pass our bar.
Two Stocks to Buy:
Mueller Water Products (MWA)
Net Cash Position: $7.3 million (0.2% of Market Cap)
As one of the oldest companies in the water infrastructure industry, Mueller (NYSE: MWA) is a provider of water infrastructure products and flow control systems for various sectors.
Why Are We Backing MWA?
- Operating profits and efficiency rose over the last five years as it benefited from some fixed cost leverage
- Performance over the past two years shows its incremental sales were extremely profitable, as its annual earnings per share growth of 45.2% outpaced its revenue gains
- Free cash flow margin grew by 4.7 percentage points over the last five years, giving the company more chips to play with
Mueller Water Products is trading at $27.04 per share, or 19.1x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free.
HCI Group (HCI)
Net Cash Position: $1.15 billion (58.6% of Market Cap)
Starting as a Florida "take-out" insurer that assumed policies from the state-backed Citizens Property Insurance Corporation, HCI Group (NYSE: HCI) provides property and casualty insurance, primarily homeowners coverage, while leveraging proprietary technology to improve underwriting and claims processing.
Why Do We Love HCI?
- Net premiums earned expanded by 28.7% annually over the last two years, demonstrating exceptional market penetration this cycle
- Incremental sales over the last two years have been highly profitable as its earnings per share increased by 75.7% annually, topping its revenue gains
- Annual book value per share growth of 55% over the last two years was superb and indicates its capital strength increased during this cycle
At $150.50 per share, HCI Group trades at 1.6x forward P/B. Is now the time to initiate a position? See for yourself in our comprehensive research report, it’s free.
Stocks We Like Even More
ONE MORE THING: Top 6 Stocks for This Week. This market is separating quality stocks from expensive ones fast. AI taking down whole sectors with no warning. In a rotation this fast, you need more than a list of good companies.
Our AI system flagged Palantir before it ran 1,662%. AppLovin before it ran 753%. Nvidia before it ran 1,178%. Each week it produces 6 new names that pass the same tests. Get Our Top 6 Stocks for Free HERE.
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,326% between June 2020 and June 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.
