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.
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 are three companies with net cash positions to avoid and some better alternatives instead.
Unity (U)
Net Cash Position: $114.6 million (0.6% of Market Cap)
Powering over half of the world's mobile games and expanding into industries from automotive to architecture, Unity (NYSE:U) provides software tools and services that allow developers to create, run, and monetize interactive 2D and 3D content across multiple platforms.
Why Does U Give Us Pause?
- Flat sales over the last two years suggest it must innovate and find new ways to grow
- Offerings struggled to generate meaningful interest as its average billings growth of 12.3% over the last year did not impress
- Expenses have increased as a percentage of revenue over the last year as its operating margin fell by 2.4 percentage points
Unity is trading at $43.15 per share, or 7.8x forward price-to-sales. If you’re considering U for your portfolio, see our FREE research report to learn more.
Supernus Pharmaceuticals (SUPN)
Net Cash Position: $332.3 million (13.9% 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 Do We Pass on SUPN?
- Annual revenue growth of 6.5% over the last five years was below our standards for the healthcare sector
- Modest revenue base of $822.8 million gives it less fixed cost leverage and fewer distribution channels than larger companies
- 16.5 percentage point decline in its free cash flow margin over the last five years reflects the company’s increased investments to defend its market position
Supernus Pharmaceuticals’s stock price of $41.29 implies a valuation ratio of 2.6x forward price-to-sales. Dive into our free research report to see why there are better opportunities than SUPN.
Banner Bank (BANR)
Net Cash Position: $304.5 million (12.4% 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 Does BANR Worry Us?
- 3.2% annual revenue growth over the last five years was slower than its banking peers
- Net interest income trends were unexciting over the last five years as its 4.5% annual growth was below the typical banking firm
- Earnings growth underperformed the sector average over the last five years as its EPS grew by just 4% annually
At $72.17 per share, Banner Bank trades at 1.2x forward P/B. Check out our free in-depth research report to learn more about why BANR doesn’t pass our bar.
Stocks We Like More
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Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Comfort Systems (+1,154% between June 2020 and June 2025). Find your next big winner with StockStory today.