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.
Luckily for you, we built StockStory to help you separate the good from the bad. Keeping that in mind, here is one cash-producing company that leverages its financial strength to beat its competitors and two that may face some trouble.
Two Stocks to Sell:
Best Buy (BBY)
Trailing 12-Month Free Cash Flow Margin: 3.6%
With humble beginnings as a stereo equipment seller, Best Buy (NYSE: BBY) now sells a broad selection of consumer electronics, appliances, and home office products.
Why Should You Sell BBY?
- Poor same-store sales performance over the past two years indicates it’s having trouble bringing new shoppers into its brick-and-mortar locations
- Widely-available products (and therefore stiff competition) result in an inferior gross margin of 22.5% that must be offset through higher volumes
- Operating margin of 3% falls short of the industry average, and the smaller profit dollars make it harder to react to unexpected market developments
At $67.14 per share, Best Buy trades at 10.1x forward P/E. Read our free research report to see why you should think twice about including BBY in your portfolio.
FactSet (FDS)
Trailing 12-Month Free Cash Flow Margin: 27.4%
Founded in 1978 when financial data was still primarily delivered through paper reports, FactSet (NYSE: FDS) provides financial data, analytics, and technology solutions that investment professionals use to research, analyze, and manage their portfolios.
Why Does FDS Worry Us?
- Annual revenue growth of 5.5% over the last two years was below our standards for the financials sector
- Earnings per share lagged its peers over the last two years as they only grew by 8.1% annually
FactSet is trading at $290.50 per share, or 16.3x forward P/E. Dive into our free research report to see why there are better opportunities than FDS.
One Stock to Watch:
Waste Management (WM)
Trailing 12-Month Free Cash Flow Margin: 9.7%
Headquartered in Houston, Waste Management (NYSE: WM) is a provider of comprehensive waste management services in North America.
Why Do We Like WM?
- Market share has increased this cycle as its 10.9% annual revenue growth over the last two years was exceptional
- Superior product capabilities and pricing power result in a top-tier gross margin of 38.7%
- Excellent operating margin of 17.2% highlights the efficiency of its business model
Waste Management’s stock price of $219.99 implies a valuation ratio of 27.2x forward P/E. Is now the time to initiate a position? Find out in our full research report, it’s free for active Edge members.
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 9 Market-Beating Stocks. 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 Exlservice (+354% five-year return). Find your next big winner with StockStory today for free. Find your next big winner with StockStory today. Find your next big winner with StockStory today.
