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.
Not all businesses with cash are winners, and that’s why we built StockStory - to help you separate the good from the bad. Keeping that in mind, here is one company with a net cash position that can continue growing sustainably and two with hidden risks.
Two Stocks to Sell:
Energy Recovery (ERII)
Net Cash Position: $74.72 million (17.5% of Market Cap)
Having saved far more than a trillion gallons of water, Energy Recovery (NASDAQ:ERII) provides energy recovery devices to the water treatment, oil and gas, and chemical processing sectors.
Why Is ERII Not Exciting?
- Sales trends were unexciting over the last five years as its 1.6% annual growth was below the typical industrials company
- Forecasted revenue decline of 32.9% for the upcoming 12 months implies demand will fall off a cliff
- Earnings per share were flat over the last five years and fell short of the peer group average
Energy Recovery is trading at $8.25 per share, or 76.6x forward P/E. Check out our free in-depth research report to learn more about why ERII doesn’t pass our bar.
Supernus Pharmaceuticals (SUPN)
Net Cash Position: $344.2 million (13.3% of Market Cap)
With a diverse portfolio of eight FDA-approved medications targeting neurological conditions, Supernus Pharmaceuticals (NASDAQ:SUPN) develops and markets treatments for central nervous system disorders including epilepsy, ADHD, Parkinson's disease, and migraine.
Why Does SUPN Give Us Pause?
- Sales trends were unexciting over the last five years as its 5.9% annual growth was below the typical healthcare company
- Subscale operations are evident in its revenue base of $776.9 million, meaning it has fewer distribution channels than its larger rivals
- Waning returns on capital from an already weak starting point displays the inefficacy of management’s past and current investment decisions
At $43.94 per share, Supernus Pharmaceuticals trades at 2.8x forward price-to-sales. To fully understand why you should be careful with SUPN, check out our full research report (it’s free).
One Stock to Watch:
Dynatrace (DT)
Net Cash Position: $1.01 billion (8% of Market Cap)
With its platform processing over 30 trillion pieces of IT performance data daily, Dynatrace (NYSE:DT) provides an AI-powered platform that helps organizations monitor, secure, and optimize their applications and IT infrastructure across cloud environments.
Why Are We Positive on DT?
- Winning new contracts that can potentially increase in value as its billings growth has averaged 24% over the last year
- Superior software functionality and low servicing costs are reflected in its top-tier gross margin of 81.7%
- Strong free cash flow margin of 26.2% enables it to reinvest or return capital consistently
Dynatrace’s stock price of $43.30 implies a valuation ratio of 5.6x forward price-to-sales. Is now the right time to buy? Find out in our full research report, it’s free.
Stocks We Like Even More
WHILE YOU’RE HERE: Top 9 Market-Beating Stocks. The best stocks don’t just beat the market once. They do it again. And again. Robust revenue growth, rising free cash flow, returns on capital that leave their competition in the dust. The market has already rewarded these businesses.
But our AI platform says the party isn’t over. Find out which 9 stocks made the cut this week — FREE. Get Our Top 9 Market-Beating 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.
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