Generating cash is essential for any business, but not all cash-rich companies are great investments. Some produce plenty of cash but fail to allocate it effectively, leading to missed opportunities.
Not all companies are created equal, and StockStory is here to surface the ones with real upside. Keeping that in mind, here is one cash-producing company that leverages its financial strength to beat its competitors and two that may struggle to keep up.
Two Stocks to Sell:
eXp World (EXPI)
Trailing 12-Month Free Cash Flow Margin: 3.5%
Founded in 2009, eXp World (NASDAQ: EXPI) is a real estate company known for its virtual, cloud-based approach to real estate brokerage.
Why Should You Dump EXPI?
- Demand for its offerings was relatively low as its number of transactions has underwhelmed
- Operating margin of -0.3% falls short of the industry average, and the smaller profit dollars make it harder to react to unexpected market developments
- Earnings per share fell by 49.7% annually over the last five years while its revenue grew, showing its incremental sales were much less profitable
At $9.51 per share, eXp World trades at 21.9x forward P/E. Dive into our free research report to see why there are better opportunities than EXPI.
Agilent (A)
Trailing 12-Month Free Cash Flow Margin: 17.9%
Originally spun off from Hewlett-Packard in 1999 as its measurement and analytical division, Agilent Technologies (NYSE: A) provides analytical instruments, software, services, and consumables for laboratory workflows in life sciences, diagnostics, and applied chemical markets.
Why Are We Wary of A?
- Customers postponed purchases of its products and services this cycle as its revenue declined by 3% annually over the last two years
- Core business is underperforming as its organic revenue has disappointed over the past two years, suggesting it might need acquisitions to stimulate growth
- Free cash flow margin dropped by 3.6 percentage points over the last five years, implying the company became more capital intensive as competition picked up
Agilent’s stock price of $121.38 implies a valuation ratio of 20.9x forward P/E. Read our free research report to see why you should think twice about including A in your portfolio.
One Stock to Watch:
Sprouts (SFM)
Trailing 12-Month Free Cash Flow Margin: 6%
Playing on the secular trend of healthier living, Sprouts Farmers Market (NASDAQ: SFM) is a grocery store chain emphasizing natural and organic products.
Why Do We Watch SFM?
- Fast expansion of new stores to reach markets with few or no locations is justified by its same-store sales growth
- Locations open for at least a year are seeing increased demand as same-store sales have averaged 6.6% growth over the past two years
- Market share is on track to rise over the next 12 months as its 11.6% projected revenue growth implies demand will accelerate from its six-year trend
Sprouts is trading at $162 per share, or 33.4x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free.
High-Quality Stocks for All Market Conditions
Donald Trump’s victory in the 2024 U.S. Presidential Election sent major indices to all-time highs, but stocks have retraced as investors debate the health of the economy and the potential impact of tariffs.
While this leaves much uncertainty around 2025, a few companies are poised for long-term gains regardless of the political or macroeconomic climate, like our 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).
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