While strong cash flow is a key indicator of stability, it doesn’t always translate to superior returns. Some cash-heavy businesses struggle with inefficient spending, slowing demand, or weak competitive positioning.
Not all companies are created equal, and StockStory is here to surface the ones with real upside. That said, here is one cash-producing company that reinvests wisely to drive long-term success and two that may struggle to keep up.
Two Stocks to Sell:
RingCentral (RNG)
Trailing 12-Month Free Cash Flow Margin: 20.8%
Built on its proprietary Message Video Phone (MVP) platform that unifies multiple communication methods, RingCentral (NYSE: RNG) provides AI-driven cloud communications and collaboration solutions that enable businesses to connect through voice, video, messaging, and contact center services.
Why Do We Avoid RNG?
- Average billings growth of 4.2% over the last year was subpar, suggesting it struggled to push its software and might have to lower prices to stimulate demand
- Estimated sales growth of 4.3% for the next 12 months implies demand will slow from its two-year trend
- Extended payback periods on sales investments suggest the company’s platform isn’t resonating enough to drive efficient sales conversions
At $26.61 per share, RingCentral trades at 0.9x forward price-to-sales. To fully understand why you should be careful with RNG, check out our full research report (it’s free).
CBRE (CBRE)
Trailing 12-Month Free Cash Flow Margin: 3.5%
Established in 1906, CBRE (NYSE: CBRE) is one of the largest commercial real estate services firms in the world.
Why Should You Sell CBRE?
- Scale is a double-edged sword because it limits the company’s growth potential compared to its smaller competitors, as reflected in its below-average annual revenue increases of 10.3% for the last five years
- Ability to fund investments or reward shareholders with increased buybacks or dividends is restricted by its weak free cash flow margin of 3.1% for the last two years
- Diminishing returns on capital from an already low starting point show that neither management’s prior nor current bets are going as planned
CBRE is trading at $166.04 per share, or 23x forward P/E. Dive into our free research report to see why there are better opportunities than CBRE.
One Stock to Watch:
Nutanix (NTNX)
Trailing 12-Month Free Cash Flow Margin: 29.5%
Originally pioneering hyperconverged infrastructure to break down traditional data center silos, Nutanix (NASDAQ: NTNX) provides a unified software platform that enables organizations to run applications and manage data across private, public, and hybrid cloud environments.
Why Are We Positive On NTNX?
- Customers view its software as mission-critical to their operations as its ARR has averaged 17.6% growth over the last year
- Superior software functionality and low servicing costs result in a best-in-class gross margin of 87%
- Well-designed software integrates seamlessly with other workflows, enabling swift payback periods on marketing expenses and customer growth at scale
Nutanix’s stock price of $39.15 implies a valuation ratio of 3.7x forward price-to-sales. Is now the time to initiate a position? See for yourself in our in-depth research report, it’s free.
Stocks We Like Even More
Your portfolio can’t afford to be based on yesterday’s story. The risk in a handful of heavily crowded stocks is rising daily.
The names generating the next wave of massive growth are right here in our Top 6 Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 244% over the last five years (as of June 30, 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,326% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Comfort Systems (+782% five-year return). Find your next big winner with StockStory today.
