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.
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 are three companies with net cash positions to avoid and some better alternatives instead.
MongoDB (MDB)
Net Cash Position: $2.42 billion (13.4% of Market Cap)
Started in 2007 by the team behind Google’s ad platform, DoubleClick, MongoDB offers database-as-a-service that helps companies store large volumes of semi-structured data.
Why Does MDB Fall Short?
- Historical operating margin losses show it had an inefficient cost structure while scaling
- Projected 1.2 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
MongoDB is trading at $220.25 per share, or 7.6x forward price-to-sales. Check out our free in-depth research report to learn more about why MDB doesn’t pass our bar.
ACV Auctions (ACVA)
Net Cash Position: $175.3 million (6.2% of Market Cap)
Founded in 2014, ACV Auctions (NASDAQ: ACVA) is an online auction marketplace for car dealers and wholesalers to buy and sell used cars.
Why Does ACVA Give Us Pause?
- High servicing costs result in an inferior gross margin of 25.1% that must be offset through higher volumes
- Expensive marketing campaigns hurt its profitability and make us wonder what would happen if it let up on the gas
- Low free cash flow margin of 0.3% for the last two years gives it little breathing room, constraining its ability to self-fund growth or return capital to shareholders
ACV Auctions’s stock price of $16.54 implies a valuation ratio of 30.9x forward EV/EBITDA. To fully understand why you should be careful with ACVA, check out our full research report (it’s free).
Advanced Energy (AEIS)
Net Cash Position: $137.6 million (3% of Market Cap)
Pioneering technologies for radio frequency power delivery, Advanced Energy (NASDAQ: AEIS) provides power supplies, thermal management systems, and measurement and control instruments for various manufacturing processes.
Why Do We Pass on AEIS?
- Sales tumbled by 8.8% annually over the last two years, showing market trends are working against its favor during this cycle
- Capital intensity has ramped up over the last five years as its free cash flow margin decreased by 6.6 percentage points
- Eroding returns on capital suggest its historical profit centers are aging
At $121.56 per share, Advanced Energy trades at 24.2x forward P/E. Dive into our free research report to see why there are better opportunities than AEIS.
Stocks We Like More
Donald Trump’s victory in the 2024 U.S. Presidential Election sent major indices to all-time highs, but stocks have retraced as investors debate the health of the economy and the potential impact of tariffs.
While this leaves much uncertainty around 2025, a few companies are poised for long-term gains regardless of the political or macroeconomic climate, like 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 Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today for free.
