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. Keeping that in mind, here is one company with a net cash position that can leverage its balance sheet to grow and two best left off your watchlist.
Two Software Stocks to Sell:
PagerDuty (PD)
Net Cash Position: $67.1 million (5.8% of Market Cap)
Born from the frustration of developers being woken up by unprioritized alerts, PagerDuty (NYSE: PD) is a digital operations management platform that helps organizations detect and respond to IT incidents, outages, and other critical issues in real-time.
Why Do We Steer Clear of PD?
- Customers had second thoughts about committing to its platform over the last year as its average billings growth of 1.1% underwhelmed
- Estimated sales growth of 1.1% for the next 12 months implies demand will slow from its two-year trend
- Projected 3.8 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
PagerDuty’s stock price of $14.06 implies a valuation ratio of 2.3x forward price-to-sales. To fully understand why you should be careful with PD, check out our full research report (it’s free).
Pegasystems (PEGA)
Net Cash Position: $304.9 million (5.4% of Market Cap)
With a "Center-out Business Architecture" approach that transcends organizational silos, Pegasystems (NASDAQ: PEGA) develops software that helps organizations automate workflows and use artificial intelligence to improve customer experiences and business processes.
Why Do We Pass on PEGA?
- Products, pricing, or go-to-market strategy may need some adjustments as its 3.6% average billings growth over the last year was weak
- Long payback periods on sales and marketing expenses limit customer growth and signal the company operates in a highly competitive environment
- Expenses have increased as a percentage of revenue over the last year as its operating margin fell by 6.5 percentage points
At $34.90 per share, Pegasystems trades at 3.1x forward price-to-sales. If you’re considering PEGA for your portfolio, see our FREE research report to learn more.
One Software Stock to Buy:
Zscaler (ZS)
Net Cash Position: $1.61 billion (4.6% of Market Cap)
Pioneering the "zero trust" approach that has fundamentally changed enterprise network security, Zscaler (NASDAQ: ZS) provides a cloud-based security platform that connects users, devices, and applications securely without traditional network-based security hardware.
Why Will ZS Outperform?
- Ability to secure long-term commitments with customers is evident in its 25.2% ARR growth over the last year
- Software platform has product-market fit given the rapid recovery of its customer acquisition costs
- Impressive free cash flow profitability enables the company to fund new investments or reward investors with share buybacks/dividends
Zscaler is trading at $206.25 per share, or 8.8x forward price-to-sales. Is now a good time to buy? See for yourself in our in-depth research report, it’s free.
Stocks We Like Even More
WHILE YOU’RE HERE: Top 9 Market-Beating Stocks. The best stocks don’t just beat the market once. They do it again. And again. Robust revenue growth, rising free cash flow, returns on capital that leave their competition in the dust. The market has already rewarded these businesses.
But our AI platform says the party isn’t over. Find out which 9 stocks made the cut this week — FREE. Get Our Top 9 Market-Beating Stocks for Free HERE.
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Comfort Systems (+1,154% between June 2020 and June 2025). Find your next big winner with StockStory today.
