3 Cash-Heavy Stocks Walking a Fine Line

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. That said, here are three companies with net cash positions to steer clear of and a few alternatives to consider.

F5 (FFIV)

Net Cash Position: $1.22 billion (5.6% of Market Cap)

Originally named after the F5 tornado, the most powerful on the meteorological scale, F5 (NASDAQ:FFIV) provides security and delivery solutions that protect applications across cloud, data center, and edge environments for large organizations.

Why Is FFIV Not Exciting?

1. Average ARR growth of 3.3% over the last year has disappointed, suggesting it’s had a hard time winning long-term deals and renewals
2. Estimated sales growth of 5.8% for the next 12 months implies demand will slow from its two-year trend
3. Operating margin didn’t move over the last year, showing it couldn’t increase its efficiency

F5 is trading at $378.82 per share, or 6.4x forward price-to-sales. Check out our free in-depth research report to learn more about why FFIV doesn’t pass our bar.

NBT Bancorp (NBTB)

Net Cash Position: $232.7 million (9.7% of Market Cap)

Tracing its roots back to 1856 when it first opened its doors in Norwich, New York, NBT Bancorp (NASDAQ:NBTB) is a community-oriented financial institution providing banking, wealth management, and insurance services to individuals and businesses across the northeastern United States.

Why Does NBTB Fall Short?

1. Muted 9.4% annual revenue growth over the last five years shows its demand lagged behind its banking peers
2. Incremental sales over the last five years were less profitable as its 4.8% annual earnings per share growth lagged its revenue gains
3. Projected tangible book value per share growth of 11.1% for the next 12 months suggests sluggish capital generation

At $46.25 per share, NBT Bancorp trades at 1.2x forward P/B. Read our free research report to see why you should think twice about including NBTB in your portfolio.

Banner Bank (BANR)

Net Cash Position: $306.4 million (13.9% of Market Cap)

Founded in 1890 in Walla Walla, Washington, and evolving through more than a century of economic cycles, Banner Corporation (NASDAQ:BANR) operates Banner Bank, providing commercial banking services, loans, and financial products to individuals and businesses across Washington, Oregon, California, Idaho, and Utah.

Why Are We Hesitant About BANR?

1. Sales trends were unexciting over the last five years as its 3.1% annual growth was below the typical banking company
2. Annual net interest income growth of 4.5% over the last five years was below our standards for the banking sector
3. Earnings growth underperformed the sector average over the last two years as its EPS grew by just 6.4% annually

Banner Bank’s stock price of $64.95 implies a valuation ratio of 1.1x forward P/B. Dive into our free research report to see why there are better opportunities than BANR.

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