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.
Financial flexibility is valuable, but it’s not everything - at StockStory, we help you find the stocks that can not only survive but also outperform. Keeping that in mind, here is one company with a net cash position that can leverage its balance sheet to grow and two that may struggle.
Two Stocks to Sell:
The Real Brokerage (REAX)
Net Cash Position: $99.73 million (20.8% of Market Cap)
Founded in Toronto, Canada in 2014, The Real Brokerage (NASDAQ: REAX) is a technology-driven real estate brokerage firm combining a tech-centric model with an agent-centric philosophy.
Why Is REAX Risky?
- Subpar operating margin of -0.6% constrains its ability to invest in process improvements or effectively respond to new competitive threats
- Earnings growth over the last four years fell short of the peer group average as its EPS only increased by 8.5% annually
- Poor free cash flow margin of 3.3% for the last two years limits its freedom to invest in growth initiatives, execute share buybacks, or pay dividends
The Real Brokerage’s stock price of $2.24 implies a valuation ratio of 0.2x trailing 12-month price-to-sales. Dive into our free research report to see why there are better opportunities than REAX.
Ibotta (IBTA)
Net Cash Position: $139.3 million (16.3% of Market Cap)
Originally launched as a way to make grocery shopping more rewarding for budget-conscious consumers, Ibotta (NYSE: IBTA) is a mobile shopping app that allows consumers to earn cash back on everyday purchases by completing tasks and submitting receipts.
Why Does IBTA Worry Us?
- Muted 1.2% annual revenue growth over the last two years shows its demand lagged behind its business services peers
- Modest revenue base of $340.3 million gives it less fixed cost leverage and fewer distribution channels than larger companies
- Earnings per share have dipped by 35.2% annually over the past one years, which is concerning because stock prices follow EPS over the long term
At $36.82 per share, Ibotta trades at 22.7x forward P/E. Read our free research report to see why you should think twice about including IBTA in your portfolio.
One Stock to Watch:
LegalZoom (LZ)
Net Cash Position: $167.9 million (16% of Market Cap)
Founded by famous lawyer Robert Shapiro, LegalZoom (NASDAQ: LZ) offers online legal services and documentation assistance for individuals and businesses.
Why Are We Positive On LZ?
- Has the opportunity to boost monetization through new features and premium offerings as its subscription units have grown by 11.6% annually over the last two years
- Platform’s growing usage and its ability to increase user spending by 35.2% annually showcases its high switching costs
- Share buybacks catapulted its annual earnings per share growth to 31.2%, which outperformed its revenue gains over the last three years
LegalZoom is trading at $5.89 per share, or 4.6x forward EV/EBITDA. Is now the right time to buy? Find out in our full research report, it’s free.
Stocks We Like Even More
ONE MORE THING: Top 5 Growth Stocks. The biggest stock winners almost always had one thing in common before they ran. Revenue growing like crazy. Meta. CrowdStrike. Broadcom. Our AI flagged all three. They returned 315%, 314%, and 455%, respectively.
Find out which 5 stocks it's flagging for this month - FREE. Get Our Top 5 Growth Stocks for Free HERE.
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-micro-cap company Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today.
