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.

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 are three companies with net cash positions to avoid and some better alternatives instead.

Workday (WDAY)

Net Cash Position: $1.62 billion (4.6% of Market Cap)

Born from the vision of PeopleSoft founders after Oracle's hostile takeover of their previous company, Workday (NASDAQ: WDAY) provides cloud-based software for financial management, human resources, planning, and analytics to help organizations manage their business operations.

Why Does WDAY Give Us Pause?

1. ARR growth averaged a weak 12.5% over the last year, suggesting that competition is pulling some attention away from its software
2. Estimated sales growth of 11.5% for the next 12 months implies demand will slow from its two-year trend
3. Operating profits increased over the last year as the company gained some leverage on its fixed costs and became more efficient

Workday’s stock price of $136.71 implies a valuation ratio of 3.5x forward price-to-sales. Check out our free in-depth research report to learn more about why WDAY doesn’t pass our bar.

Movado (MOV)

Net Cash Position: $102 million (19.8% of Market Cap)

With its watches displayed in 20 museums around the world, Movado (NYSE: MOV) is a watchmaking company with a portfolio of watch brands and accessories.

Why Do We Think MOV Will Underperform?

1. Muted 4.7% annual revenue growth over the last five years shows its demand lagged behind its consumer discretionary peers
2. Ability to fund investments or reward shareholders with increased buybacks or dividends is restricted by its weak free cash flow margin of 4.3% for the last two years
3. Waning returns on capital from an already weak starting point displays the inefficacy of management’s past and current investment decisions

At $23.29 per share, Movado trades at 14.2x forward P/E. If you’re considering MOV for your portfolio, see our FREE research report to learn more.

Richardson Electronics (RELL)

Net Cash Position: $31.4 million (18.9% of Market Cap)

Founded in 1947, Richardson Electronics (NASDAQ: RELL) is a distributor of power grid and microwave tubes as well as consumables related to those products.

Why Should You Dump RELL?

1. Product roadmap and go-to-market strategy need to be reconsidered as its backlog has averaged 3.4% declines over the past two years
2. Low free cash flow margin of -0.9% for the last five years gives it little breathing room, constraining its ability to self-fund growth or return capital to shareholders
3. Diminishing returns on capital from an already low starting point show that neither management’s prior nor current bets are going as planned

Richardson Electronics is trading at $11.44 per share, or 35.4x forward P/E. To fully understand why you should be careful with RELL, check out our full research report (it’s free).

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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.