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.
Not all businesses with cash are winners, and that’s why we built StockStory - to help you separate the good from the bad. That said, here are two companies with net cash positions that can continue growing sustainably and one best left off your watchlist.
One Stock to Sell:
First Hawaiian Bank (FHB)
Net Cash Position: $1.84 billion (56.5% of Market Cap)
Dating back to 1858 as Hawaii's oldest bank with deep roots in the Pacific island communities, First Hawaiian (NASDAQ:FHB) operates a full-service community bank providing deposit accounts, commercial and consumer loans, credit cards, and wealth management services across Hawaii, Guam, and Saipan.
Why Should You Dump FHB?
- 3.8% annual net interest income growth over the last five years was slower than its banking peers
- Performance over the past two years shows its incremental sales were much less profitable, as its earnings per share fell by 1.9% annually
- Products and services are facing profitability challenges during this cycle, as seen in its flat tangible book value per share over the last five years
At $26.32 per share, First Hawaiian Bank trades at 1.2x forward P/B. To fully understand why you should be careful with FHB, check out our full research report (it’s free for active Edge members).
Two Stocks to Buy:
Microsoft (MSFT)
Net Cash Position: $41.46 billion (1.2% of Market Cap)
Originally named "Micro-soft" for microcomputer software when founded in 1975, Microsoft (NASDAQ:MSFT) is a global technology company that develops software, cloud services, devices, and AI solutions for consumers, businesses, and organizations worldwide.
Why Are We Bullish on MSFT?
- Microsoft is one of the great brands not just in tech but all of business. It produces mission-critical software and bundles it together, resulting in cream-of-the-crop gross margins.
- The company's elite unit economics lead to robust profit margins that improve over time. This speaks to the scale advantages and operating efficiency across its diverse portfolio, which spans everything from Office and Azure to Minecraft.
- Microsoft has a virtuous cycle of returns. Its dominant market position enables it to generate strong free cash flow, and it reinvests these funds into promising ventures that further strengthen its competitive moat.
Microsoft’s stock price of $483.80 implies a valuation ratio of 28.8x forward price-to-earnings. Is now the right time to buy? Find out in our full research report, it’s free for active Edge members.
Copart (CPRT)
Net Cash Position: $5.14 billion (13.9% of Market Cap)
Starting as a single salvage yard in California in 1982, Copart (NASDAQ:CPRT) operates an online auction platform that connects sellers of damaged and salvage vehicles with buyers ranging from dismantlers and rebuilders to used car dealers and exporters.
Why Are We Backing CPRT?
- Annual revenue growth of 15.7% over the past five years was outstanding, reflecting market share gains this cycle
- Performance over the past five years shows its incremental sales were extremely profitable, as its annual earnings per share growth of 19.3% outpaced its revenue gains
- Strong free cash flow margin of 24.2% enables it to reinvest or return capital consistently, and its growing cash flow gives it even more resources to deploy
Copart is trading at $38.18 per share, or 23.4x forward P/E. Is now the time to initiate a position? See for yourself in our full research report, it’s free for active Edge members.
High-Quality Stocks for All Market Conditions
Check out the high-quality names we’ve flagged in our Top 5 Strong Momentum Stocks for this week. 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-micro-cap company Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today.