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 are two companies with net cash positions that can continue growing sustainably and one best left off your watchlist.
One Stock to Sell:
Ruger (RGR)
Net Cash Position: $116 million (19.2% of Market Cap)
Founded in 1949, Ruger (NYSE: RGR) is an American manufacturer of firearms for the commercial sporting market.
Why Do We Think RGR Will Underperform?
- Annual sales declines of 3.8% for the past five years show its products and services struggled to connect with the market
- Poor free cash flow margin of 7.7% for the last two years limits its freedom to invest in growth initiatives, execute share buybacks, or pay dividends
- Waning returns on capital from an already weak starting point displays the inefficacy of management’s past and current investment decisions
Ruger’s stock price of $38.08 implies a valuation ratio of 20.2x forward P/E. Read our free research report to see why you should think twice about including RGR in your portfolio.
Two Stocks to Buy:
Guidewire Software (GWRE)
Net Cash Position: $45.3 million (0.3% of Market Cap)
With its systems powering the operations of hundreds of insurance brands across 42 countries, Guidewire Software (NYSE: GWRE) provides a technology platform that helps property and casualty insurance companies manage their core operations, digital engagement, and analytics.
Why Should You Buy GWRE?
- Winning new contracts that can potentially increase in value as its billings growth has averaged 20.6% over the last year
- Well-designed software integrates seamlessly with other workflows, enabling swift payback periods on marketing expenses and customer growth at scale
- Healthy operating margin of 8.2% shows it’s a well-run company with efficient processes, and its operating leverage amplified its profits over the last year
Guidewire Software is trading at $161.84 per share, or 8.3x forward price-to-sales. Is now the right time to buy? See for yourself in our comprehensive research report, it’s free.
Badger Meter (BMI)
Net Cash Position: $95.73 million (2.4% of Market Cap)
The developer of the world’s first frost-proof water meter in 1905, Badger Meter (NYSE: BMI) provides water control and measure equipment to various industries.
What Makes BMI Stand Out?
- Annual revenue growth of 13.6% over the past five years was outstanding, reflecting market share gains this cycle
- Performance over the past five years shows its incremental sales were extremely profitable, as its annual earnings per share growth of 17.5% outpaced its revenue gains
- Impressive free cash flow profitability enables the company to fund new investments or reward investors with share buybacks/dividends, and its recently improved profitability means it has even more resources to invest or distribute
At $137.08 per share, Badger Meter trades at 29.3x forward P/E. Is now the time to initiate a position? Find out 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 Tecnoglass (+1,552% between June 2020 and June 2025). Find your next big winner with StockStory today.
