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 excels at turning cash into shareholder value and two that may face some trouble.
Two Stocks to Sell:
Gibraltar (ROCK)
Trailing 12-Month Free Cash Flow Margin: 8.4%
Gibraltar (NASDAQ: ROCK) makes renewable energy, agriculture technology and infrastructure products. Its mission statement is to make everyday living more sustainable.
Why Are We Cautious About ROCK?
- Products and services are facing significant end-market challenges during this cycle as sales have declined by 5.4% annually over the last two years
- Gross margin of 25.4% reflects its high production costs
Gibraltar’s stock price of $64.16 implies a valuation ratio of 12.6x forward P/E. To fully understand why you should be careful with ROCK, check out our full research report (it’s free).
Agilent (A)
Trailing 12-Month Free Cash Flow Margin: 16%
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 Does A Give Us Pause?
- Sales tumbled by 1.5% annually over the last two years, showing market trends are working against its favor during this cycle
- Organic revenue growth fell short of our benchmarks over the past two years and implies it may need to improve its products, pricing, or go-to-market strategy
- 4.6 percentage point decline in its free cash flow margin over the last five years reflects the company’s increased investments to defend its market position
Agilent is trading at $123.64 per share, or 20.7x forward P/E. If you’re considering A for your portfolio, see our FREE research report to learn more.
One Stock to Buy:
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 Is SFM a Top Pick?
- Offensive push to build new stores and attack its untapped market opportunities is backed by its same-store sales growth
- Locations open for at least a year are seeing increased demand as same-store sales have averaged 7.5% growth over the past two years
- Projected revenue growth of 11.8% for the next 12 months is above its six-year trend, pointing to accelerating demand
At $109.88 per share, Sprouts trades at 20.4x 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
Trump’s April 2025 tariff bombshell triggered a massive market selloff, but stocks have since staged an impressive recovery, leaving those who panic sold on the sidelines.
Take advantage of the rebound by checking out 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 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 Tecnoglass (+1,754% 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
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