2 Cash-Heavy Stocks to Target This Week and 1 We Turn Down

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. That said, here are two companies with net cash positions that can leverage their balance sheets to grow and one with hidden risks.

One Stock to Sell:

First American Financial (FAF)

Net Cash Position: $287.6 million (4.6% of Market Cap)

Tracing its roots back to 1889 when California was experiencing its first major real estate boom, First American Financial (NYSE:FAF) provides title insurance, settlement services, and risk solutions for residential and commercial real estate transactions across the United States and internationally.

Why Do We Think FAF Will Underperform?

1. 1.2% annual revenue growth over the last five years was slower than its insurance peers
2. Net premiums earned plateaued over the last five years, signaling weak incremental demand for its insurance policies
3. Earnings per share were flat over the last five years and fell short of the peer group average

First American Financial’s stock price of $61.24 implies a valuation ratio of 1.1x forward P/B. If you’re considering FAF for your portfolio, see our FREE research report to learn more.

Two Stocks to Watch:

SmartRent (SMRT)

Net Cash Position: $100 million (28.7% of Market Cap)

Founded by an employee at a real estate rental company, SmartRent (NYSE:SMRT) provides smart home devices and software for multifamily residential properties, single-family rental homes, and student housing communities.

Why Do We Watch SMRT?

1. Ability to secure long-term commitments with customers is evident in its 22.9% average ARR growth over the past two years
2. Earnings growth has massively outpaced its peers over the last three years as its EPS has compounded at 24.1% annually
3. Improving returns on capital suggest its past investments are beginning to deliver value

At $1.85 per share, SmartRent trades at 86x forward EV-to-EBITDA. Is now a good time to buy? Find out in our full research report, it’s free.

Planet Labs (PL)

Net Cash Position: $216 million (2.3% of Market Cap)

Pioneering the concept of "agile aerospace" with hundreds of small but powerful satellites, Planet Labs (NYSE:PL) operates the world's largest fleet of Earth observation satellites, capturing daily images of our planet to provide insights on deforestation, agriculture, and climate change.

Why Will PL Outperform?

1. Impressive 23.1% annual revenue growth over the last five years indicates it’s winning market share this cycle
2. Free cash flow turned positive over the last five years, showing the company has crossed a key inflection point
3. Historical investments are beginning to pay off as its returns on capital are growing

Planet Labs is trading at $28.91 per share, or 958x forward EV-to-EBITDA. Is now the time to initiate a position? See for yourself in our comprehensive research report, it’s free.

Stocks We Like Even More

Check out the high-quality names we’ve flagged in our Top 9 Market-Beating Stocks. This is a curated list of our High Quality stocks that have generated a market-beating return of 244% over the last five years (as of June 30, 2025).

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.