1 Cash-Heavy Stock for Long-Term Investors and 2 to Think Twice About

Yahoo

27-04-2025

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.
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 balances growth with stability and two that may struggle.
Net Cash Position: $338.3 million (15.5% of Market Cap)
With customers across the foundry and fabless markets, FormFactor (NASDAQ:FORM) is a US-based provider of test and measurement technologies for semiconductors.
Why Are We Out on FORM?
Annual revenue growth of 5.3% over the last five years was below our standards for the semiconductor sector
Projected sales growth of 2.1% for the next 12 months suggests sluggish demand
Free cash flow margin shrank by 5.6 percentage points over the last five years, suggesting the company is consuming more capital to stay competitive
FormFactor is trading at $28.77 per share, or 17x forward price-to-earnings. Check out our free in-depth research report to learn more about why FORM doesn't pass our bar.
Net Cash Position: $118.6 million (14.9% of Market Cap)
Born from the Founder's idea of making a toy frog with a glue gun, Stratasys (NASDAQ:SSYS) offers 3D printers and related materials, software, and services to many industries.
Why Should You Sell SSYS?
Sales tumbled by 2.1% annually over the last five years, showing market trends are working against its favor during this cycle
Earnings per share decreased by more than its revenue over the last five years, partly because it diluted shareholders
Cash burn makes us question whether it can achieve sustainable long-term growth
Stratasys's stock price of $9.60 implies a valuation ratio of 27.2x forward price-to-earnings. To fully understand why you should be careful with SSYS, check out our full research report (it's free).
Net Cash Position: $27.23 million (2.3% of Market Cap)
Founded in 2009, Integral Ad Science (NASDAQ:IAS) provides digital advertising verification and optimization solutions, ensuring that ads are viewable by real people in brand-safe environments across various platforms and devices.
Why Does IAS Stand Out?
Software platform has product-market fit given the rapid recovery of its customer acquisition costs
Healthy operating margin of 11.4% shows it's a well-run company with efficient processes, and its operating leverage amplified its profits over the last year
Strong free cash flow margin of 21.9% enables it to reinvest or return capital consistently
At $7.14 per share, Integral Ad Science trades at 2x forward price-to-sales. Is now the right time to buy? See for yourself in our in-depth research report, it's free.
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 Strong Momentum 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 United Rentals (+322% five-year return). Find your next big winner with StockStory today for free.