1 Cash-Heavy Stock for Long-Term Investors and 2 to Steer Clear Of

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 that may struggle.

Two Stocks to Sell:

Movado (MOV)

Net Cash Position: $111.2 million (32.5% of Market Cap)

With its watches displayed in 20 museums around the world, Movado (NYSE:MOV) is a watchmaking company with a portfolio of watch brands and accessories.

Why Should You Dump MOV?

1. Annual revenue declines of 6% over the last two years indicate problems with its market positioning
2. Operating margin of 4.4% falls short of the industry average, and the smaller profit dollars make it harder to react to unexpected market developments
3. Shrinking returns on capital suggest that increasing competition is eating into the company’s profitability

Movado’s stock price of $15.38 implies a valuation ratio of 0.5x trailing 12-month price-to-sales. Dive into our free research report to see why there are better opportunities than MOV.

Proto Labs (PRLB)

Net Cash Position: $94.22 million (10.4% of Market Cap)

Pioneering the concept of online quoting and manufacturing for custom prototypes and low-volume production parts, Proto Labs (NYSE:PRLB) offers injection molding, 3D printing, and sheet metal fabrication for manufacturers in various industries.

Why Do We Avoid PRLB?

1. Sales were flat over the last two years, indicating it’s failed to expand this cycle
2. Costs have risen faster than its revenue over the last five years, causing its operating margin to decline by 7.3 percentage points
3. Earnings per share have contracted by 10.5% annually over the last five years, a headwind for returns as stock prices often echo long-term EPS performance

At $38.02 per share, Proto Labs trades at 25.8x forward P/E. To fully understand why you should be careful with PRLB, check out our full research report (it’s free).

One Stock to Watch:

Deckers (DECK)

Net Cash Position: $1.61 billion (10.7% of Market Cap)

Established in 1973, Deckers (NYSE:DECK) is a footwear and apparel conglomerate with a portfolio of lifestyle and performance brands.

Why Does DECK Stand Out?

1. Strong consumer demand for its brand drove 18.5% annual revenue growth over the last five years, outperforming sector peers
2. Share buybacks catapulted its annual earnings per share growth to 31.3%, which outperformed its revenue gains over the last five years
3. Improving returns on capital reflect management’s ability to monetize investments

Deckers is trading at $101.00 per share, or 16.1x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free.

High-Quality Stocks for All Market Conditions

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