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. That said, here is one cash-producing company that excels at turning cash into shareholder value and two that may face some trouble.
Two Stocks to Sell:
Trimble (TRMB)
Trailing 12-Month Free Cash Flow Margin: 8.8%
Playing a role in the construction of the Paris Grand, Trimble (NASDAQ: TRMB) offers geospatial devices and technology to the agriculture, construction, transportation, and logistics industries.
Why Do We Think TRMB Will Underperform?
- Absence of organic revenue growth over the past two years suggests it may have to lean into acquisitions to drive its expansion
- Free cash flow margin shrank by 12 percentage points over the last five years, suggesting the company is consuming more capital to stay competitive
- Low returns on capital reflect management’s struggle to allocate funds effectively, and its shrinking returns suggest its past profit sources are losing steam
Trimble is trading at $79.13 per share, or 23.8x forward P/E. If you’re considering TRMB for your portfolio, see our FREE research report to learn more.
Ibotta (IBTA)
Trailing 12-Month Free Cash Flow Margin: 24.4%
Originally launched as a way to make grocery shopping more rewarding for budget-conscious consumers, Ibotta (NYSE: IBTA) is a mobile shopping app that allows consumers to earn cash back on everyday purchases by completing tasks and submitting receipts.
Why Does IBTA Worry Us?
- Smaller revenue base of $367.6 million means it hasn’t achieved the economies of scale that some industry juggernauts enjoy
- Sales are projected to tank by 10.9% over the next 12 months as demand evaporates
Ibotta’s stock price of $28.52 implies a valuation ratio of 35.8x forward P/E. To fully understand why you should be careful with IBTA, check out our full research report (it’s free for active Edge members).
One Stock to Buy:
Hubbell (HUBB)
Trailing 12-Month Free Cash Flow Margin: 15%
A respected player in the electrical segment, Hubbell (NYSE: HUBB) manufactures electronic products for the construction, industrial, utility, and telecommunications markets.
Why Are We Bullish on HUBB?
- Operating profits and efficiency rose over the last five years as it benefited from some fixed cost leverage
- Share repurchases have amplified shareholder returns as its annual earnings per share growth of 18.1% exceeded its revenue gains over the last five years
- Free cash flow margin grew by 5.9 percentage points over the last five years, giving the company more chips to play with
At $462.52 per share, Hubbell trades at 23.6x forward P/E. Is now the right time to buy? See for yourself in our full research report, it’s free for active Edge members.
High-Quality Stocks for All Market Conditions
Fresh US-China trade tensions just tanked stocks—but strong bank earnings are fueling a sharp rebound. Don’t miss the bounce.
Don’t let fear keep you from great opportunities and take a look at Top 5 Strong Momentum Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-micro-cap company Kadant (+351% 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
StockStory is growing and hiring equity analyst and marketing roles. Are you a 0 to 1 builder passionate about the markets and AI? See the open roles here.
