1 Cash-Heavy Stock with Impressive Fundamentals and 2 to Ignore

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.

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 is one company with a net cash position that can continue growing sustainably and two with hidden risks.

Two Stocks to Sell:

Brady (BRC)

Net Cash Position: $8.30 million (0.2% of Market Cap)

Founded in 1914 and evolving through more than a century of industrial innovation, Brady (NYSE:BRC) manufactures and supplies identification solutions and workplace safety products that help companies identify and protect their premises, products, and people.

Why Are We Hesitant About BRC?

1. Organic revenue growth fell short of our benchmarks over the past two years and implies it may need to improve its products, pricing, or go-to-market strategy
2. Subscale operations are evident in its revenue base of $1.42 billion, meaning it has fewer distribution channels than its larger rivals
3. 1.8 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

At $69.89 per share, Brady trades at 14.4x forward price-to-earnings. Read our free research report to see why you should think twice about including BRC in your portfolio.

Phreesia (PHR)

Net Cash Position: $66.42 million (4.6% of Market Cap)

Founded in 2005 to streamline the traditionally paper-heavy patient check-in process, Phreesia (NYSE:PHR) provides software solutions that automate patient intake, registration, and payment processes for healthcare organizations while improving patient engagement in their care.

Why Are We Cautious About PHR?

1. Revenue base of $419.8 million puts it at a disadvantage compared to larger competitors exhibiting economies of scale
2. Negative free cash flow raises questions about the return timeline for its investments
3. Negative returns on capital show that some of its growth strategies have backfired

Phreesia’s stock price of $24.49 implies a valuation ratio of 28.9x forward price-to-earnings. Check out our free in-depth research report to learn more about why PHR doesn’t pass our bar.

One Stock to Buy:

Nova (NVMI)

Net Cash Position: $350.5 million (6.1% of Market Cap)

Headquartered in Israel, Nova (NASDAQ:NVMI) is a provider of quality control systems used in semiconductor manufacturing.

Why Is NVMI a Good Business?

1. Annual revenue growth of 24.5% over the past five years was outstanding, reflecting market share gains this cycle
2. Free cash flow margin jumped by 12.3 percentage points over the last five years, giving the company more resources to pursue growth initiatives, repurchase shares, or pay dividends
3. Market-beating returns on capital illustrate that management has a knack for investing in profitable ventures

Nova is trading at $193.54 per share, or 25.7x forward price-to-earnings. Is now a good time to buy? Find out in our full research report, it’s free.

Stocks We Like Even More

Market indices reached historic highs following Donald Trump’s presidential victory in November 2024, but the outlook for 2025 is clouded by new trade policies that could impact business confidence and growth.

While this has caused many investors to adopt a "fearful" wait-and-see approach, we’re leaning into our best ideas that can grow regardless of the political or macroeconomic climate. Take advantage of Mr. Market by checking out our Top 5 Strong Momentum Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 175% over the last five years.

Stocks that made our list in 2019 include now familiar names such as Nvidia (+2,183% between December 2019 and December 2024) as well as under-the-radar businesses like Axon (+711% five-year return). Find your next big winner with StockStory today for free.