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.
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. Keeping that in mind, here is one company with a net cash position that can leverage its balance sheet to grow and two best left off your watchlist.
Two Stocks to Sell:
PagerDuty (PD)
Net Cash Position: $69.11 million (11.7% of Market Cap)
Born from the frustration of developers being woken up by unprioritized alerts, PagerDuty (NYSE: PD) is a digital operations management platform that helps organizations detect and respond to IT incidents, outages, and other critical issues in real-time.
Why Do We Pass on PD?
- Products, pricing, or go-to-market strategy may need some adjustments as its 2.5% average billings growth over the last year was weak
- Sales are projected to remain flat over the next 12 months as demand decelerates from its two-year trend
- Projected 2.3 percentage point decline in its free cash flow margin next year reflects the company’s plans to increase its investments to defend its market position
PagerDuty is trading at $6.94 per share, or 1.3x forward price-to-sales. Read our free research report to see why you should think twice about including PD in your portfolio.
Zillow (ZG)
Net Cash Position: $838 million (7.6% of Market Cap)
Founded by Expedia co-founders Lloyd Frink and Rich Barton, Zillow (NASDAQ: ZG) is the leading U.S. online real estate marketplace.
Why Do We Avoid ZG?
- Sales tumbled by 5% annually over the last five years, showing consumer trends are working against its favor
- Low free cash flow margin of 10.6% for the last two years gives it little breathing room, constraining its ability to self-fund growth or return capital to shareholders
- Returns on capital are growing as management invests in more worthwhile ventures
At $45.61 per share, Zillow trades at 20.3x forward P/E. Check out our free in-depth research report to learn more about why ZG doesn’t pass our bar.
One Stock to Buy:
Cloudflare (NET)
Net Cash Position: $582.9 million (0.7% of Market Cap)
With a massive network spanning more than 310 cities in over 120 countries, Cloudflare (NYSE: NET) provides a global network that delivers security, performance and reliability services to protect websites, applications, and corporate networks.
Why Will NET Outperform?
- Billings have averaged 33% growth over the last year, showing it’s securing new contracts that could potentially increase in value over time
- Market share will likely rise over the next 12 months as its expected revenue growth of 28.8% is robust
- Fast payback periods on sales and marketing expenses allow the company to invest heavily and onboard many customers concurrently
Cloudflare’s stock price of $225.00 implies a valuation ratio of 26.6x forward price-to-sales. Is now a good time to buy? See for yourself in our full research report, it’s free.
Stocks We Like Even More
ALSO WORTH WATCHING: Top 5 Momentum Stocks. The best time to own a great stock is when the market is finally noticing it. These aren't just high-quality businesses. Something is happening with them right now. Elite fundamentals meeting near-term momentum — both boxes checked at the same time.
Find out which stocks our AI platform is flagging this week. See this week's Strong Momentum stocks — FREE. Get Our Strong Momentum Stocks for Free HERE.
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,326% between June 2020 and June 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.
