Companies with more cash than debt often have stronger financial flexibility, making them attractive in uncertain markets. With interest payments less of a worry, these businesses can invest more in growth, innovation, or buybacks and dividends.
Finding the best investments isn’t always easy, and that’s why we started StockStory. That said, here are three companies with net cash positions that can leverage their balance sheets to grow.
Pinterest (PINS)
Net Cash Position: $93.53 million (0.8% of Market Cap)
Created with the idea of virtually replacing paper catalogues, Pinterest (NYSE: PINS) is an online image and social discovery platform.
Why Should You Buy PINS?
- Monthly Active Users have grown by 11.2% annually, allowing for more profitable cross-selling opportunities if it can build complementary products and features
- Performance over the past three years was turbocharged by share buybacks, which enabled its earnings per share to grow faster than its revenue
- Impressive free cash flow profitability enables the company to fund new investments or reward investors with share buybacks/dividends, and its rising cash conversion increases its margin of safety
Pinterest is trading at $20.49 per share, or 8.8x forward EV/EBITDA. Is now a good time to buy? Find out in our full research report, it’s free.
Costco (COST)
Net Cash Position: $11.86 billion (2.7% of Market Cap)
Designed to be a one-stop shop for the suburban consumer, Costco (NASDAQ: COST) is a membership-only retail chain that sells groceries, apparel, toys, and household items, often in bulk quantities.
Why Does COST Catch Our Eye?
- Brick-and-mortar locations are witnessing elevated demand as their same-store sales growth averaged 6.6% over the past two years
- Massive revenue base of $293.6 billion makes up for its weaker gross margin and makes it a household name that influences purchasing decisions
- Stellar returns on capital showcase management’s ability to surface highly profitable business ventures, and its rising returns show it’s making even more lucrative bets
At $995.85 per share, Costco trades at 45.7x forward P/E. Is now the right time to buy? See for yourself in our full research report, it’s free.
Kratos (KTOS)
Net Cash Position: $1.28 billion (10.5% of Market Cap)
Established with a commitment to supporting national security, Kratos (NASDAQ: KTOS) is a provider of advanced engineering, technology, and security solutions tailored for critical national security applications.
Why Do We Watch KTOS?
- Average organic revenue growth of 14.6% over the past two years demonstrates its ability to expand independently without relying on acquisitions
- Projected revenue growth of 30% for the next 12 months is above its two-year trend, pointing to accelerating demand
- Earnings per share grew by 15.8% annually over the last two years and trumped its peers
Kratos’s stock price of $69.01 implies a valuation ratio of 72.7x forward P/E. Is now the time to initiate a position? Find out in our full research report, it’s free.
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