Companies with more cash than debt can be financially resilient, but that doesn’t mean they’re all strong investments. Some lack leverage because they struggle to grow or generate consistent profits, making them unattractive borrowers.
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 is one company with a net cash position that can continue growing sustainably and two that may struggle.
Two Software Stocks to Sell:
Elastic (ESTC)
Net Cash Position: $865.3 million (9% of Market Cap)
Built on the powerful open-source Elasticsearch technology that powers search functionality for thousands of websites worldwide, Elastic (NYSE:ESTC) provides a search and AI platform that helps organizations find insights from their data, monitor applications, and protect against security threats.
Why Are We Wary of ESTC?
- Customers had second thoughts about committing to its platform over the last year as its average billings growth of 14% underwhelmed
- Customer acquisition costs are recovered fairly quickly, allowing the company to invest in growth initiatives
- Operating margin failed to increase over the last year, indicating the company couldn’t optimize its expenses
At $91.30 per share, Elastic trades at 4.6x forward price-to-sales. Dive into our free research report to see why there are better opportunities than ESTC.
Sprout Social (SPT)
Net Cash Position: $74.05 million (12.6% of Market Cap)
Born from the recognition that businesses needed a centralized way to handle their growing social media presence, Sprout Social (NASDAQ:SPT) provides a comprehensive software platform that helps businesses manage, analyze, and optimize their presence across various social media networks.
Why Is SPT Not Exciting?
- ARR growth averaged a weak 10.1% over the last year, suggesting that competition is pulling some attention away from its software
- Estimated sales growth of 5.3% for the next 12 months implies demand will slow from its two-year trend
- Poor expense management has led to operating margin losses
Sprout Social’s stock price of $9.72 implies a valuation ratio of 1.2x forward price-to-sales. To fully understand why you should be careful with SPT, check out our full research report (it’s free).
One Software Stock to Buy:
Palantir Technologies (PLTR)
Net Cash Position: $9.20 billion (2% 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 Top Pick?
- Average billings growth of 76.7% over the last year enhances its liquidity and shows there is steady demand for its products
- Fast payback periods on sales and marketing expenses allow the company to invest heavily and onboard many customers concurrently
- PLTR is a free cash flow machine with the flexibility to invest in growth initiatives or return capital to shareholders
Palantir Technologies is trading at $191.58 per share, or 48.4x forward price-to-sales. Is now the right time to buy? Find out in our full research report, it’s free.
Stocks We Like Even More
WHILE YOU’RE HERE: Top 9 Market-Beating Stocks. The best stocks don’t just beat the market once. They do it again. And again. Robust revenue growth, rising free cash flow, returns on capital that leave their competition in the dust. The market has already rewarded these businesses.
But our AI platform says the party isn’t over. Find out which 9 stocks made the cut this week — FREE. Get Our Top 9 Market-Beating 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-small-cap company Comfort Systems (+1,154% between June 2020 and June 2025). Find your next big winner with StockStory today.