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. Keeping that in mind, here is one company with a net cash position that can leverage its balance sheet to grow and two that may struggle.
Two Stocks to Sell:
Lemonade (LMND)
Net Cash Position: $203.8 million (3.4% 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 Does LMND Worry Us?
- Performance over the past two years shows its incremental sales were less profitable, as its 17.4% annual earnings per share growth trailed its revenue gains
- Policy losses and capital returns have eroded its book value per share this cycle as its book value per share declined by 7.2% annually over the last five years
- Push for growth has led to negative returns on capital, signaling value destruction
Lemonade’s stock price of $80.63 implies a valuation ratio of 12x forward P/B. If you’re considering LMND for your portfolio, see our FREE research report to learn more.
Columbia Banking System (COLB)
Net Cash Position: $1.38 billion (15.7% of Market Cap)
Created through the merger of two Pacific Northwest banking institutions with deep regional roots, Columbia Banking System (NASDAQ: COLB) operates Umpqua Bank, providing commercial, consumer, and wealth management services across eight western states.
Why Is COLB Not Exciting?
- Annual revenue growth of 5.7% over the last two years was below our standards for the banking sector
- Annual earnings per share growth of 2.8% underperformed its revenue over the last two years, showing its incremental sales were less profitable
- Products and services are facing significant credit quality challenges during this cycle as tangible book value per share has declined by 1.2% annually over the last five years
At $29.41 per share, Columbia Banking System trades at 1.1x forward P/B. Read our free research report to see why you should think twice about including COLB in your portfolio.
One Stock to Buy:
Reddit (RDDT)
Net Cash Position: $2.20 billion (4.6% of Market Cap)
Founded in 2005 by two University of Virginia roommates, Reddit (NYSE: RDDT) facilitates user-generated content across niche communities (called subreddits) that discuss anything from stocks to dating and memes.
Why Is RDDT a Good Business?
- Domestic Daily Active Visitors are rising, meaning the company can increase revenue without incurring additional customer acquisition costs if it can cross-sell additional products and features
- Earnings per share have massively outperformed its peers over the last three years, increasing by 40.2% annually
- Free cash flow margin expanded by 41.8 percentage points over the last few years, providing additional flexibility for investments and share buybacks/dividends
Reddit is trading at $254.25 per share, or 45.1x forward EV/EBITDA. Is now the right time to buy? Find out in our full research report, it’s free.
Stocks We Like Even More
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.
