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 GitLab Inc. (NASDAQ:GTLB) 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 team of software engineers working together in an open office, developing innovative solutions.
GitLab Inc. (NASDAQ:GTLB)
Number of Hedge Fund Holders: 51
Cash and Cash Equivalents as of December 31, 2024: $1,036,285,000
GitLab Inc. (NASDAQ:GTLB) is a software company that helps businesses streamline their DevOps process. Its platform makes it easier to plan, build, secure, and deploy software while improving speed and visibility. The company also provides training and professional services. In the third fiscal quarter of 2025, GitLab joined forces with AWS to launch an integrated solution combining GitLab Duo and Amazon Q. This partnership makes it easier for developers to work with AI-powered DevSecOps workflows in AWS environments, helping organizations deploy secure software faster.
In the third fiscal quarter of 2025, GitLab Inc. (NASDAQ:GTLB) raked in $196 million in revenue, a solid 31% increase from last year. The company expanded its customer base, with the number of clients spending over $5,000 in ARR increasing by 16% to 9,519, while those spending more than $100,000 grew by 31% to 1,144. Profitability also improved, with non-GAAP operating income soaring to $25.9 million from $4.7 million a year ago, while adjusted free cash flow turned positive at $9.7 million, compared to a negative $6.7 million last year. Looking ahead, GitLab Inc. (NASDAQ:GTLB) forecasts Q4 revenue between $205 million and $206 million, reflecting 25% to 26% year-over-year growth. It is one of the best cash rich stocks to buy.
According to Insider Monkey’s fourth quarter database, 51 hedge funds were bullish on GitLab Inc. (NASDAQ:GTLB), compared to 43 funds in the prior quarter. Mick Hellman’s HMI Capital is the leading stakeholder of the company, with 4.46 million shares worth $251.6 million.
Overall GTLB ranks 10th on our list of the best cash-rich mid cap stocks to buy. While we acknowledge the potential of GTLB 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 GTLB 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.
