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 continue growing sustainably and two best left off your watchlist.
Two Stocks to Sell:
American Outdoor Brands (AOUT)
Net Cash Position: $15.73 million (10.3% of Market Cap)
Spun off from Smith and Wesson in 2020, American Outdoor Brands (NASDAQ:AOUT) is an outdoor and recreational products company that offers outdoor and shooting sports products but does not sell firearms themselves.
Why Should You Sell AOUT?
- Annual revenue growth of 3% over the last two years was below our standards for the consumer discretionary sector
- Persistent operating margin losses suggest the business manages its expenses poorly
- Shrinking returns on capital from an already weak position reveal that neither previous nor ongoing investments are yielding the desired results
American Outdoor Brands’s stock price of $12.21 implies a valuation ratio of 24.1x forward P/E. Dive into our free research report to see why there are better opportunities than AOUT.
Eastern Bank (EBC)
Net Cash Position: $143.2 million (4.7% of Market Cap)
Founded in 1818 as one of America's oldest mutual banks before converting to a public company in 2020, Eastern Bankshares (NASDAQ:EBC) operates as a bank holding company providing commercial and retail banking services primarily in Massachusetts, New Hampshire, and Rhode Island.
Why Do We Think Twice About EBC?
- Customers postponed purchases of its products and services this cycle as its revenue declined by 1.9% annually over the last five years
- Products and services are facing significant credit quality challenges during this cycle as tangible book value per share has declined by 7.7% annually over the last four years
- Tangible book value per share is projected to decrease by 3.5% over the next 12 months as capital generation weakens
Eastern Bank is trading at $15.24 per share, or 0.9x forward P/B. Check out our free in-depth research report to learn more about why EBC doesn’t pass our bar.
One Stock to Buy:
Remitly (RELY)
Net Cash Position: $472.7 million (11.6% of Market Cap)
With Amazon founder Jeff Bezos as an early investor, Remitly (NASDAQ:RELY) is an online platform that enables consumers to safely and quickly send money globally.
Why Are We Backing RELY?
- Has the opportunity to boost monetization through new features and premium offerings as its active customers have grown by 37.3% annually over the last two years
- Incremental sales over the last three years have been highly profitable as its earnings per share increased by 74% annually, topping its revenue gains
- Free cash flow margin grew by 35.6 percentage points over the last few years, giving the company more chips to play with
At $20.01 per share, Remitly trades at 20.2x forward EV/EBITDA. Is now the right time to buy? See for yourself in our in-depth research report, it’s free.
Stocks We Like Even More
Market indices reached historic highs following Donald Trump’s presidential victory in November 2024, but the outlook for 2025 is clouded by new trade policies that could impact business confidence and growth.
While this has caused many investors to adopt a "fearful" wait-and-see approach, we’re leaning into our best ideas that can grow regardless of the political or macroeconomic climate. Take advantage of Mr. Market by checking out our Top 5 Growth Stocks for this month. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).
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-small-cap company Comfort Systems (+782% five-year return). Find your next big winner with StockStory today for free. Find your next big winner with StockStory today. Find your next big winner with StockStory today.