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. Keeping that in mind, here is one company with a net cash position that can leverage its balance sheet to grow and two that may struggle.
Two Stocks to Sell:
Dillard's (DDS)
Net Cash Position: $660.7 million (7.1% of Market Cap)
With stores located largely in the Southern and Western US, Dillard’s (NYSE:DDS) is a department store chain that sells clothing, cosmetics, accessories, and home goods.
Why Do We Think Twice About DDS?
- Lack of new stores suggest it’s attempting to increase revenue at existing locations because demand is sluggish
- Lagging same-store sales over the past two years suggest it might have to change its pricing and marketing strategy to stimulate demand
- Projected sales decline of 2.1% for the next 12 months points to an even tougher demand environment ahead
At $584.17 per share, Dillard's trades at 21.7x forward P/E. Dive into our free research report to see why there are better opportunities than DDS.
SmartRent (SMRT)
Net Cash Position: $105 million (38% 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 Is SMRT Not Exciting?
- Sales tumbled by 13.2% annually over the last two years, showing market trends are working against its favor during this cycle
- Suboptimal cost structure is highlighted by its history of operating margin losses
- Cash burn makes us question whether it can achieve sustainable long-term growth
SmartRent’s stock price of $1.41 implies a valuation ratio of 1.7x forward price-to-sales. To fully understand why you should be careful with SMRT, check out our full research report (it’s free for active Edge members).
One Stock to Buy:
Palantir Technologies (PLTR)
Net Cash Position: $5.76 billion (1.3% of Market Cap)
Named after the all-seeing stones in "Lord of the Rings," Palantir Technologies (NASDAQ:PLTR) develops software platforms that help government agencies and enterprises integrate, analyze, and operationalize their data for decision-making.
Why Is PLTR a Good Business?
- Winning new contracts that can potentially increase in value as its billings growth has averaged 44.2% over the last year
- Software platform has product-market fit given the rapid recovery of its customer acquisition costs
- Robust free cash flow margin of 55% gives it many options for capital deployment
Palantir Technologies is trading at $181.71 per share, or 97.2x forward price-to-sales. Is now the time to initiate a position? See for yourself in our in-depth research report, it’s free for active Edge members.
High-Quality Stocks for All Market Conditions
Donald Trump’s April 2025 "Liberation Day" tariffs sent markets into a tailspin, but stocks have since rebounded strongly, proving that knee-jerk reactions often create the best buying opportunities.
The smart money is already positioning for the next leg up. Don’t miss out on the recovery - check 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 Exlservice (+354% 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
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