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

Marqeta (MQ)

Net Cash Position: $1.10 billion (55% of Market Cap)

Founded by CEO Jason Gardner in 2009, Marqeta (NASDAQ:MQ) is an innovative card issuer that provides companies with the ability to issue and process virtual, physical, and tokenized credit and debit cards.

Why Are We Wary of MQ?

1. Sales stagnated over the last three years and signal the need for new growth strategies

2. Long payback periods on sales and marketing expenses limit customer growth and signal the company operates in a highly competitive environment

3. Persistent operating losses suggest the business manages its expenses poorly

Marqeta’s stock price of $3.97 implies a valuation ratio of 3.4x forward price-to-sales. Dive into our free research report to see why there are better opportunities than MQ .

Zeta (ZETA)

Net Cash Position: $169.9 million (5.4% of Market Cap)

Co-founded by former Apple CEO John Sculley, Zeta Global (NYSE:ZETA) provides software and data analytics tools that help companies market their products to billions of customers.

Why Does ZETA Give Us Pause?

1. Competitive market dynamics make it difficult to retain customers, leading to a weak 97% net revenue retention rate

2. Steep infrastructure costs and weaker unit economics for a software company are reflected in its low gross margin of 60.3%

3. Historical operating losses show it had an inefficient cost structure while scaling

Zeta is trading at $13.21 per share, or 2.7x forward price-to-sales. If you’re considering ZETA for your portfolio, see our FREE research report to learn more .

Champion Homes (SKY)

Net Cash Position: $468.9 million (9.7% of Market Cap)

Founded in 1951, Champion Homes (NYSE:SKY) is a manufacturer of modular homes and buildings in North America.

Why Does SKY Fall Short?

1. Flat unit sales over the past two years suggest it might have to lower prices to accelerate growth

2. Performance over the past two years was negatively impacted by new share issuances as its earnings per share dropped by 31.5% annually, worse than its revenue

3. Diminishing returns on capital suggest its earlier profit pools are drying up

At $84.47 per share, Champion Homes trades at 22.6x forward price-to-earnings. To fully understand why you should be careful with SKY, check out our full research report (it’s free) .