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.
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. That said, here is one company with a net cash position that can leverage its balance sheet to grow and two with hidden risks.
Two Stocks to Sell:
Old Republic International (ORI)
Net Cash Position: $105.4 million (1% of Market Cap)
Founded during the Roaring Twenties in 1923 and weathering nearly a century of economic cycles, Old Republic International (NYSE:ORI) is a diversified insurance holding company that provides property, liability, title, and mortgage guaranty insurance through its various subsidiaries.
Why Does ORI Fall Short?
- Sluggish 4.9% annualized growth in net premiums earned over the last five years indicates the firm trailed its insurance peers
- Earnings growth over the last two years fell short of the peer group average as its EPS only increased by 9.9% annually
- Book value per share is projected to decrease by 1.1% over the next 12 months as capital generation weakens
Old Republic International is trading at $42.11 per share, or 1.6x forward P/B. To fully understand why you should be careful with ORI, check out our full research report (it’s free for active Edge members).
Lemonade (LMND)
Net Cash Position: $203.8 million (3.5% 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 Is LMND Not Exciting?
- 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
- Negative return on equity shows management lost money while trying to expand the business
At $77.46 per share, Lemonade trades at 11.7x forward P/B. Check out our free in-depth research report to learn more about why LMND doesn’t pass our bar.
One Stock to Buy:
MercadoLibre (MELI)
Net Cash Position: $3.04 billion (2.9% of Market Cap)
Originally started as an online auction platform, MercadoLibre (NASDAQ:MELI) is a one-stop e-commerce marketplace and fintech platform in Latin America.
Why Is MELI a Good Business?
- Has the opportunity to boost monetization through new features and premium offerings as its unique active buyers have grown by 21.7% annually over the last two years
- Switching costs of its platform were on full display over the last two years as it not only grew engagement but also increased the average revenue per user by 13.9% annually
- MELI is a free cash flow machine with the flexibility to invest in growth initiatives or return capital to shareholders, and its rising cash conversion increases its margin of safety
MercadoLibre’s stock price of $2,119 implies a valuation ratio of 21.3x forward EV/EBITDA. Is now a good time to buy? See for yourself in our in-depth research report, it’s free for active Edge members.
Stocks We Like Even More
Fresh US-China trade tensions just tanked stocks—but strong bank earnings are fueling a sharp rebound. Don’t miss the bounce.
Don’t let fear keep you from great opportunities and take a look at 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 Kadant (+351% five-year return). Find your next big winner with StockStory today for free. Find your next big winner with StockStory today. Find your next big winner with StockStory today
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