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. That said, here are three companies with net cash positions to avoid and some better alternatives instead.
Magnachip (MX)
Net Cash Position: $73.86 million (66.1% of Market Cap)
With its technology found in common consumer electronics such as TVs and smartphones, Magnachip Semiconductor (NYSE: MX) is a provider of analog and mixed-signal semiconductors.
Why Is MX Risky?
- Products and services are facing significant end-market challenges during this cycle as sales have declined by 16.3% annually over the last five years
- Increased cash burn over the last five years raises questions about the return timeline for its investments
- Depletion of cash reserves could lead to a fundraising event that triggers shareholder dilution
Magnachip is trading at $3.11 per share, or 0.6x forward price-to-sales. If you’re considering MX for your portfolio, see our FREE research report to learn more.
PlayStudios (MYPS)
Net Cash Position: $103.5 million (87.8% of Market Cap)
Founded by a team of former gaming industry executives, PlayStudios (NASDAQ: MYPS) offers free-to-play digital casino games.
Why Are We Out on MYPS?
- Sluggish trends in its daily active users suggest customers aren’t adopting its solutions as quickly as the company hoped
- Historical operating margin losses point to an inefficient cost structure
- Earnings per share have contracted by 12.6% annually over the last three years, a headwind for returns as stock prices often echo long-term EPS performance
PlayStudios’s stock price of $0.96 implies a valuation ratio of 2.7x forward EV-to-EBITDA. Check out our free in-depth research report to learn more about why MYPS doesn’t pass our bar.
Renasant (RNST)
Net Cash Position: $10.94 million (0.3% of Market Cap)
Founded in 1904 during a time when the South was rebuilding its economy, Renasant (NYSE: RNST) is a regional bank holding company that offers banking, wealth management, insurance, and specialized lending services throughout the Southeast.
Why Are We Wary of RNST?
- Inferior net interest margin of 3.4% means it must compensate for lower profitability through increased loan originations
- Incremental sales over the last two years were much less profitable as its earnings per share fell by 8.6% annually while its revenue grew
- Muted 4.2% annual tangible book value per share growth over the last two years shows its capital generation lagged behind its banking peers
At $36.90 per share, Renasant trades at 0.9x forward P/B. Read our free research report to see why you should think twice about including RNST in your portfolio.
Stocks We Like More
Trump’s April 2025 tariff bombshell triggered a massive market selloff, but stocks have since staged an impressive recovery, leaving those who panic sold on the sidelines.
Take advantage of the rebound by checking 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 183% over the last five years (as of March 31st 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-micro-cap company Kadant (+351% 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
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