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.
Not all businesses with cash are winners, and that’s why we built StockStory - to help you separate the good from the bad. Keeping that in mind, here is one company with a net cash position that can continue growing sustainably and two best left off your watchlist.
Two Stocks to Sell:
Callaway Golf Company (CALY)
Net Cash Position: $279.6 million (9.3% of Market Cap)
Formed between the merger of Callaway and Topgolf, Callaway Golf Company (NYSE: CALY) sells golf equipment and operates technology-driven golf entertainment venues.
Why Do We Steer Clear of CALY?
- Lackluster 3.3% annual revenue growth over the last five years indicates the company is losing ground to competitors
- Poor free cash flow margin of 14.3% for the last two years limits its freedom to invest in growth initiatives, execute share buybacks, or pay dividends
- Stagnant returns on capital show management has failed to improve the company’s business quality
Callaway Golf Company’s stock price of $17.93 implies a valuation ratio of 25.8x forward P/E. To fully understand why you should be careful with CALY, check out our full research report (it’s free).
Lemonade (LMND)
Net Cash Position: $186.1 million (4.2% of Market Cap)
Built on the principle of giving back unused premiums to charitable causes selected by policyholders, Lemonade (NYSE: LMND) is a technology-driven insurance company that offers homeowners, renters, pet, car, and life insurance through an AI-powered digital platform.
Why Do We Think Twice About LMND?
- Performance over the past two years shows its incremental sales were less profitable, as its 17% annual earnings per share growth trailed its revenue gains
- Annual book value per share declines of 18.4% for the past five years show its capital management struggled during this cycle
- Negative return on equity shows management lost money while trying to expand the business
At $71.43 per share, Lemonade trades at 11.1x forward P/B. Dive into our free research report to see why there are better opportunities than LMND.
One Stock to Buy:
Grid Dynamics (GDYN)
Net Cash Position: $310.1 million (57.7% of Market Cap)
With engineering centers across the Americas, Europe, and India serving Fortune 1000 companies, Grid Dynamics (NASDAQ: GDYN) provides technology consulting, engineering, and analytics services to help large enterprises modernize their technology systems and business processes.
Why Is GDYN a Top Pick?
- Annual revenue growth of 15.3% over the last two years was superb and indicates its market share increased during this cycle
- Earnings growth has trumped its peers over the last five years as its EPS has compounded at 20.4% annually
- Returns on capital are increasing as management’s prior bets are starting to bear fruit
Grid Dynamics is trading at $6.17 per share, or 13.2x forward P/E. Is now the time to initiate a position? See for yourself in our comprehensive research report, it’s free.
Stocks We Like Even More
ALSO WORTH WATCHING: Top 5 Momentum Stocks. The best time to own a great stock is when the market is finally noticing it. These aren’t just high-quality businesses. Something is happening with them right now. Elite fundamentals meet near-term momentum — both boxes checked at the same time.
Find out which stocks our AI platform is flagging this week. See this week’s Strong Momentum stocks — FREE. Get Our Strong Momentum 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-small-cap company Exlservice (+354% five-year return). Find your next big winner with StockStory today.
