We recently compiled a list of the 10 Cash-Rich Mid Cap Stocks To Buy Now. In this article, we are going to take a look at where Exact Sciences Corporation (NASDAQ:EXAS) stands against the other cash-rich mid cap stocks.
Cash flow is the money moving in and out of a business over a set period. It is important because it shows how much cash a company actually has on hand, rather than just looking at profits on paper. There are different types of cash flow, like cash from operating activities, which comes from a company’s main business, and free cash flow, which is the money left after covering expenses and investments. Businesses keep a close eye on their cash flow to make sure they have enough money to pay bills, invest in growth, and avoid financial trouble. Unlike profits, which can be affected by accounting rules, cash flow reflects real money coming in and going out, making it a key measure of financial health.
Warren Buffett once said that the key to investing is cash flow. How much money a business brings in and how much it pays out over time is crucial. However, despite this basic principle, many companies do not focus enough on cash flow and how efficiently they use their money.
In October 2022, market experts on CNBC’s Halftime Report emphasized the crucial role of free cash flow for businesses. They pointed out that while companies can occasionally rely on external funding from capital markets, they ultimately depend on free cash flow to sustain themselves, since these external financial boosts are not a long-term solution. As the market fluctuates between favoring growth and value stocks, investors tend to gravitate toward familiar territory, which is prioritizing companies with strong free cash flow.
Similarly, in late September 2023, Elizabeth Evans, managing partner at Evans May, told CNBC that for the first time in decades, cash holdings are generating returns. She explained that having substantial cash reserves signals strong future purchasing power, which is an encouraging sign for equity investors looking to invest for the long term. In this article, we will take a look at some cash-rich stocks to buy.
Our Methodology
For this article, we used the Finviz stock screener to identify cash-rich mid-cap stocks. We applied a filter to select companies with market caps between $2 billion and $10 billion. Additionally, we used a current ratio (CR) filter of over 2 to identify stocks with strong current assets. CR is a company’s current assets divided by its current liabilities. If the CR is over 1, it means the company has more assets than liabilities, usually because of high cash reserves, receivables, or inventory. After filtering, we manually searched for companies with cash and cash equivalents exceeding $1 billion as of December 31, 2024 and selected the 10 stocks with the highest cash reserves. The list below is ranked in ascending order based on cash and cash equivalents. We have also included hedge fund sentiment as of Insider Monkey’s database of Q4 2024.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
A research team in a laboratory discussing the results of a lab screening test for biomarkers.
Exact Sciences Corporation (NASDAQ:EXAS)
Number of Hedge Fund Holders: 49
Cash and Cash Equivalents as of December 31, 2024: $1,038,026,000
Exact Sciences Corporation (NASDAQ:EXAS) develops cancer screening and diagnostic tests, with its flagship product, Cologuard, offering a non-invasive way to detect colorectal cancer. On February 5, 2025, Flatiron Health and Exact Sciences announced a partnership to use Flatiron’s research platform to analyze data from Exact Sciences’ Oncodetect MRD test. The collaboration commenced with a clinical study involving 1,350 patients to track cancer recurrence across different solid tumors. The goal is to collect real-world data from diverse patients to help oncologists integrate MRD testing into precision cancer care.
In Q4 2024, Exact Sciences Corporation (NASDAQ:EXAS)’s revenue grew 10%, with adjusted EBITDA increasing 52% to $75 million. Screening revenue rose 14% to $553 million, fueled by strong Cologuard adoption, while precision oncology revenue saw a slight increase to $161 million. The company also strengthened its balance sheet in 2024, more than doubling free cash flow and ending the year with $1.04 billion in cash and securities. Looking ahead to 2025, revenue is expected to fall between $680 million and $695 million for Q1 and $3.025 billion to $3.085 billion for the full year.
Among the hedge funds tracked by Insider Monkey, 49 funds reported owning stakes in Exact Sciences Corporation (NASDAQ:EXAS) at the end of Q4, compared to 41 funds in the prior quarter. Israel Englander’s Millennium Management is the biggest stakeholder of the company, with 2.36 million shares worth $132.6 million.
Overall EXAS ranks 9th on our list of the best cash-rich mid cap stocks to buy. While we acknowledge the potential of EXAS as an investment, our conviction lies in the belief that certain AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than EXAS but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and Complete List of 59 AI Companies Under $2 Billion in Market Cap.
Disclosure: None. This article is originally published at Insider Monkey.