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. 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:

Brown-Forman (BF.B)

Trailing 12-Month Free Cash Flow Margin: 10.8%

Best known for its Jack Daniel’s whiskey, Brown-Forman (NYSE: BF.B) is an alcoholic beverage company with a broad portfolio of brands in wines and spirits.

Why Does BF.B Fall Short?

1. Absence of organic revenue growth over the past two years suggests it may have to lean into acquisitions to drive its expansion
2. Estimated sales decline of 3.6% for the next 12 months implies an even more challenging demand environment
3. Costs have risen faster than its revenue over the last year, causing its operating margin to decline by 6 percentage points

At $28 per share, Brown-Forman trades at 17.3x forward P/E. If you’re considering BF.B for your portfolio, see our FREE research report to learn more.

TopBuild (BLD)

Trailing 12-Month Free Cash Flow Margin: 15.2%

Established in 2015 following a spinoff from Masco Corporation, TopBuild (NYSE: BLD) is a distributor and installer of insulation and other building products.

Why Is BLD Not Exciting?

1. Sales were flat over the last two years, indicating it’s failed to expand this cycle
2. Absence of organic revenue growth over the past two years suggests it may have to lean into acquisitions to drive its expansion
3. Earnings per share lagged its peers over the last two years as they only grew by 5% annually

TopBuild is trading at $432.19 per share, or 21x forward P/E. Dive into our free research report to see why there are better opportunities than BLD.

One Stock to Watch:

Planet Labs (PL)

Trailing 12-Month Free Cash Flow Margin: 13.4%

Pioneering the concept of "agile aerospace" with hundreds of small but powerful satellites, Planet Labs (NYSE: PL) operates the world's largest fleet of Earth observation satellites, capturing daily images of our planet to provide insights on deforestation, agriculture, and climate change.

Why Does PL Stand Out?

1. Market share has increased this cycle as its 22.3% annual revenue growth over the last five years was exceptional
2. Additional sales over the last two years increased its profitability as the 34.2% annual growth in its earnings per share outpaced its revenue
3. Improving returns on capital suggest its past investments are beginning to deliver value

Planet Labs’s stock price of $13.18 implies a valuation ratio of 13x forward price-to-sales. Is now the right time to buy? Find out in our full research report, it’s free for active Edge members.

Stocks We Like Even More

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-small-cap company Comfort Systems (+782% 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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