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 balances growth with stability and two best left off your watchlist.
Two Stocks to Sell:
Callaway Golf Company (CALY)
Net Cash Position: $184.6 million (6.6% 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 Should You Dump CALY?
- Sales trends were unexciting over the last five years as its 5.3% annual growth was below the typical consumer discretionary company
- Projected 9.3 percentage point decline in its free cash flow margin next year reflects the company’s plans to increase its investments to defend its market position
- Diminishing returns on capital from an already low starting point show that neither management’s prior nor current bets are going as planned
Callaway Golf Company’s stock price of $15.67 implies a valuation ratio of 29.4x forward P/E. Dive into our free research report to see why there are better opportunities than CALY.
Texas Capital Bank (TCBI)
Net Cash Position: $826.2 million (17.9% of Market Cap)
Founded during the Texas banking renaissance of the 1990s with an entrepreneurial spirit, Texas Capital Bancshares (NASDAQ: TCBI) is a financial services firm that provides banking, wealth management, and investment banking services to businesses and individuals across Texas and beyond.
Why Are We Wary of TCBI?
- 3.9% annual net interest income growth over the last five years was slower than its banking peers
- Demand will likely be soft over the next 12 months as Wall Street’s estimates imply tepid growth of 4.4%
- Low return on equity reflects management’s struggle to allocate funds effectively
Texas Capital Bank is trading at $104.55 per share, or 1.2x forward P/B. To fully understand why you should be careful with TCBI, check out our full research report (it’s free).
One Stock to Buy:
Arlo Technologies (ARLO)
Net Cash Position: $157.8 million (9.7% of Market Cap)
Originally spun off from networking equipment maker Netgear in 2018, Arlo Technologies (NYSE: ARLO) provides cloud-based smart security devices and subscription services that help consumers and businesses monitor and protect their homes, properties, and loved ones.
Why Will ARLO Beat the Market?
- Solid 8.2% annual revenue growth over the last five years indicates its offering’s solve complex business issues
- Incremental sales significantly boosted profitability as its annual earnings per share growth of 61% over the last two years outstripped its revenue performance
- Free cash flow margin jumped by 18.5 percentage points over the last five years, giving the company more resources to pursue growth initiatives, repurchase shares, or pay dividends
At $15.24 per share, Arlo Technologies trades at 18.5x forward P/E. Is now a good time to buy? 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 meeting 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.
