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. That said, here are two companies with net cash positions that balance growth with stability and one that may struggle.
One Stock to Sell:
MasterCraft (MCFT)
Net Cash Position: $64.26 million (22.2% of Market Cap)
Started by a waterskiing instructor, MasterCraft (NASDAQ:MCFT) specializes in designing, manufacturing, and selling sport boats.
Why Does MCFT Give Us Pause?
- Number of boats sold has disappointed over the past two years, indicating weak demand for its offerings
- Free cash flow margin is forecasted to shrink by 9.2 percentage points in the coming year, suggesting the company will consume more capital to keep up with its competitors
- Shrinking returns on capital suggest that increasing competition is eating into the company’s profitability
MasterCraft is trading at $18.32 per share, or 13.7x forward P/E. If you’re considering MCFT for your portfolio, see our FREE research report to learn more.
Two Stocks to Watch:
Duolingo (DUOL)
Net Cash Position: $944.7 million (4% of Market Cap)
Founded by a Carnegie Mellon computer science professor and his Ph.D. student, Duolingo (NASDAQ:DUOL) is a mobile app helping people learn new languages.
Why Is DUOL a Top Pick?
- Monthly Active Users have grown by 39.8% annually, allowing for more profitable cross-selling opportunities if it can build complementary products and features
- Incremental sales over the last three years have been highly profitable as its earnings per share increased by 178% annually, topping 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 $520 per share, Duolingo trades at 84.5x forward EV/EBITDA. Is now the right time to buy? See for yourself in our in-depth research report, it’s free.
Watts Water Technologies (WTS)
Net Cash Position: $139.6 million (1.7% of Market Cap)
Founded in 1874, Watts Water (NYSE:WTS) specializes in manufacturing water products and systems for residential, commercial, and industrial applications globally.
Why Should WTS Be on Your Watchlist?
- Superior product capabilities and pricing power result in a stellar gross margin of 45%
- Operating profits and efficiency rose over the last five years as it benefited from some fixed cost leverage
- Share repurchases have amplified shareholder returns as its annual earnings per share growth of 16.9% exceeded its revenue gains over the last five years
Watts Water Technologies’s stock price of $240.79 implies a valuation ratio of 26x forward P/E. Is now the time to initiate a position? Find out in our full research report, it’s free.
High-Quality Stocks for All Market Conditions
The market surged in 2024 and reached record highs after Donald Trump’s presidential victory in November, but questions about new economic policies are adding much uncertainty for 2025.
While the crowd speculates what might happen next, we’re homing in on the companies that can succeed regardless of the political or macroeconomic environment. Put yourself in the driver’s seat and build a durable portfolio 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.