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:
BILL (BILL)
Net Cash Position: $52.92 million (1.4% of Market Cap)
Transforming the messy back-office financial operations that plague small business owners, BILL (NYSE: BILL) provides a cloud-based platform that automates accounts payable, accounts receivable, and expense management for small and midsize businesses.
Why Does BILL Fall Short?
- Offerings struggled to generate meaningful interest as its average billings growth of 12.7% over the last year did not impress
- Estimated sales growth of 10.7% for the next 12 months implies demand will slow from its two-year trend
- Operating profits increased over the last year as the company gained some leverage on its fixed costs and became more efficient
BILL’s stock price of $43.63 implies a valuation ratio of 2.3x forward price-to-sales. To fully understand why you should be careful with BILL, check out our full research report (it’s free).
Independent Bank (INDB)
Net Cash Position: $242.8 million (6.5% of Market Cap)
Tracing its roots back to 1907 and serving as a financial cornerstone in New England for over a century, Independent Bank Corp. (NASDAQ: INDB) operates as the holding company for Rockland Trust, providing banking, investment, and financial services across Eastern Massachusetts and Rhode Island.
Why Does INDB Give Us Pause?
- Annual tangible book value per share growth of 3.4% over the last two years was below our standards for the banking sector
- Capital generation will likely be soft over the next 12 months as Wall Street’s estimates imply tepid tangible book value per share growth of 7.4%
- Low return on equity reflects management’s struggle to allocate funds effectively
Independent Bank is trading at $78.95 per share, or 1x forward P/B. Read our free research report to see why you should think twice about including INDB in your portfolio.
One Stock to Watch:
FirstSun Capital Bancorp (FSUN)
Net Cash Position: $702.1 million (38.8% of Market Cap)
Tracing its roots back to 1892 when it first opened its doors in Kansas, FirstSun Capital Bancorp (NASDAQ: FSUN) operates Sunflower Bank, providing commercial and consumer banking services to businesses and individuals across the Southwest region.
Why Do We Like FSUN?
- Annual net interest income growth of 21.7% over the last five years was superb and indicates its market share increased during this cycle
- Demand for the next 12 months is expected to accelerate above its five-year trend as Wall Street forecasts robust net interest income growth of 47.8%
- Efficiency ratio improved by 12 percentage points over the last five years as it scaled
At $38.80 per share, FirstSun Capital Bancorp trades at 0.9x forward P/B. Is now the right time to buy? Find out in our full research report, it’s free.
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