A cash-heavy balance sheet is often a sign of strength, but not always. Some companies avoid debt because they have weak business models, limited expansion opportunities, or inconsistent cash flow.
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 are two companies with net cash positions that can leverage their balance sheets to grow and one with hidden risks.
One Stock to Sell:
UniFirst (UNF)
Net Cash Position: $47.04 million (1.1% of Market Cap)
With a fleet of trucks making weekly deliveries to over 300,000 customer locations, UniFirst (NYSE:UNF) provides, rents, cleans, and maintains workplace uniforms and protective clothing for businesses across various industries.
Why Does UNF Give Us Pause?
- Muted 3.5% annual revenue growth over the last two years shows its demand lagged behind its business services peers
- Projected sales growth of 2.5% for the next 12 months suggests sluggish demand
- Earnings per share lagged its peers over the last five years as they only grew by 2.1% annually
At $239.18 per share, UniFirst trades at 32.3x forward P/E. Dive into our free research report to see why there are better opportunities than UNF.
Two Stocks to Watch:
Energy Recovery (ERII)
Net Cash Position: $57.91 million (7% of Market Cap)
Having saved far more than a trillion gallons of water, Energy Recovery (NASDAQ:ERII) provides energy recovery devices to the water treatment, oil and gas, and chemical processing sectors.
Why Are We Positive On ERII?
- Offerings are difficult to replicate at scale and result in a best-in-class gross margin of 67.6%
- Share repurchases over the last two years enabled its annual earnings per share growth of 42.6% to outpace its revenue gains
- Free cash flow margin increased by 6.3 percentage points over the last five years, giving the company more capital to invest or return to shareholders
Energy Recovery’s stock price of $15.17 implies a valuation ratio of 17.9x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free.
Champion Homes (SKY)
Net Cash Position: $540.6 million (10.2% of Market Cap)
Founded in 1951, Champion Homes (NYSE:SKY) is a manufacturer of modular homes and buildings in North America.
Why Are We Fans of SKY?
- Annual revenue growth of 15.4% over the past two years was outstanding, reflecting market share gains this cycle
- Share repurchases over the last five years enabled its annual earnings per share growth of 29.4% to outpace its revenue gains
- ROIC punches in at 39.6%, illustrating management’s expertise in identifying profitable investments
Champion Homes is trading at $96.13 per share, or 25.6x forward P/E. Is now the right time to buy? See for yourself in our comprehensive 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 9 Market-Beating Stocks. 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.