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.
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 continue growing sustainably and two with hidden risks.
Two Stocks to Sell:
Twilio (TWLO)
Net Cash Position: $1.36 billion (6.3% of Market Cap)
Known for the clever "Twilio Magic" demo that had developers creating functioning communications apps in minutes, Twilio (NYSE:TWLO) provides a platform that enables businesses to communicate with their customers through voice, messaging, email, and other digital channels.
Why Are We Wary of TWLO?
- Customers had second thoughts about committing to its platform over the last year as its average billings growth of 13.5% underwhelmed
- Projected sales growth of 9.1% for the next 12 months suggests sluggish demand
- Sky-high servicing costs result in an inferior gross margin of 49.4% that must be offset through increased usage
Twilio’s stock price of $141.64 implies a valuation ratio of 4.2x forward price-to-sales. If you’re considering TWLO for your portfolio, see our FREE research report to learn more.
Karat Packaging (KRT)
Net Cash Position: $8.29 million (1.8% of Market Cap)
Founded as Lollicup, Karat Packaging (NASDAQ: KRT) distributes and manufactures environmentally-friendly disposable foodservice packaging solutions.
Why Are We Hesitant About KRT?
- Annual revenue growth of 6.1% over the last two years was below our standards for the industrials sector
- Revenue growth over the past two years was nullified by the company’s new share issuances as its earnings per share fell by 9.4% annually
- Ability to fund investments or reward shareholders with increased buybacks or dividends is restricted by its weak free cash flow margin of 5.5% for the last five years
Karat Packaging is trading at $22.84 per share, or 14.7x forward P/E. Dive into our free research report to see why there are better opportunities than KRT.
One Stock to Buy:
DexCom (DXCM)
Net Cash Position: $2.01 billion (7.6% of Market Cap)
Founded in 1999 and receiving its first FDA approval in 2006, DexCom (NASDAQ:DXCM) develops and sells continuous glucose monitoring systems that allow people with diabetes to track their blood sugar levels without repeated finger pricks.
Why Is DXCM a Good Business?
- Core business is healthy and doesn’t need acquisitions to boost sales as its organic revenue growth averaged 16.8% over the past two years
- Earnings per share have massively outperformed its peers over the last five years, increasing by 17.5% annually
- Free cash flow margin grew by 17.5 percentage points over the last five years, giving the company more chips to play with
At $67.48 per share, DexCom trades at 27.6x forward P/E. Is now a good time to buy? See for yourself in our full research report, it’s free for active Edge members.
High-Quality Stocks for All Market Conditions
If your portfolio success hinges on just 4 stocks, your wealth is built on fragile ground. You have a small window to secure high-quality assets before the market widens and these prices disappear.
Don’t wait for the next volatility shock. Check out our Top 5 Growth Stocks for this month. This is a curated list of our High Quality stocks that have generated a market-beating return of 244% over the last five years (as of June 30, 2025).
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 Comfort Systems (+782% five-year return). Find your next big winner with StockStory today for free. Find your next big winner with StockStory today. Find your next big winner with StockStory today.