3 Cash-Heavy Stocks in the Doghouse

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.

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 are three companies with net cash positions that don’t make the cut and some better choices instead.

Calavo (CVGW)

Net Cash Position: $19.66 million (4.1% of Market Cap)

A trailblazer in the avocado industry, Calavo Growers (NASDAQ:CVGW) is a pioneering California-based provider of high-quality avocados and other fresh food products.

Why Is CVGW Not Exciting?

1. Annual sales declines of 14.7% for the past three years show its products struggled to connect with the market
2. Revenue base of $688.3 million puts it at a disadvantage compared to larger competitors exhibiting economies of scale
3. Commoditized products, bad unit economics, and high competition are reflected in its low gross margin of 10.6%

Calavo’s stock price of $27.25 implies a valuation ratio of 15.9x forward P/E. Dive into our free research report to see why there are better opportunities than CVGW.

DistributionNOW (DNOW)

Net Cash Position: $227 million (12.6% of Market Cap)

Spun off from National Oilwell Varco, DistributionNOW (NYSE:DNOW) provides distribution and supply chain solutions for the energy and industrial end markets.

Why Do We Steer Clear of DNOW?

1. Customers postponed purchases of its products and services this cycle as its revenue declined by 4.3% annually over the last five years
2. Responsiveness to unforeseen market trends is restricted due to its substandard operating profitability
3. Earnings per share have dipped by 1.7% annually over the past two years, which is concerning because stock prices follow EPS over the long term

DistributionNOW is trading at $16.53 per share, or 20.9x forward P/E. Check out our free in-depth research report to learn more about why DNOW doesn’t pass our bar.

Moderna (MRNA)

Net Cash Position: $5.23 billion (49% of Market Cap)

Rising to global prominence during the COVID-19 pandemic with one of the first effective vaccines, Moderna (NASDAQ:MRNA) develops messenger RNA (mRNA) medicines that direct the body's cells to produce proteins with therapeutic or preventive benefits for various diseases.

Why Are We Out on MRNA?

1. Annual sales declines of 54.1% for the past two years show its products and services struggled to connect with the market during this cycle
2. Capital intensity has ramped up over the last five years as its free cash flow margin decreased by 309.9 percentage points
3. Depletion of cash reserves could lead to a fundraising event that triggers shareholder dilution

At $27.54 per share, Moderna trades at 5.1x forward price-to-sales. If you’re considering MRNA for your portfolio, see our FREE research report to learn more.

Stocks We Like More

Donald Trump’s victory in the 2024 U.S. Presidential Election sent major indices to all-time highs, but stocks have retraced as investors debate the health of the economy and the potential impact of tariffs.

While this leaves much uncertainty around 2025, a few companies are poised for long-term gains regardless of the political or macroeconomic climate, like our Top 6 Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 175% over the last five years.

Stocks that made our list in 2019 include now familiar names such as Nvidia (+2,183% between December 2019 and December 2024) as well as under-the-radar businesses like Axon (+711% five-year return). Find your next big winner with StockStory today for free.