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:
Appian (APPN)
Trailing 12-Month Free Cash Flow Margin: 7%
Powering billions of transactions daily since its founding in 1999, Appian (NASDAQ: APPN) provides a low-code platform that helps businesses automate complex processes and operationalize artificial intelligence without extensive programming knowledge.
Why Do We Think Twice About APPN?
- Revenue increased by 13.9% annually over the last two years, acceptable on an absolute basis but tepid for a software company enjoying secular tailwinds
- Competitive market means the company must spend more on sales and marketing to stand out even if the return on investment is low
- Poor free cash flow margin of 7% for the last year limits its freedom to invest in growth initiatives, execute share buybacks, or pay dividends
At $31.24 per share, Appian trades at 3.1x forward price-to-sales. To fully understand why you should be careful with APPN, check out our full research report (it’s free).
IAC (IAC)
Trailing 12-Month Free Cash Flow Margin: 8.9%
Originally known as InterActiveCorp and built through Barry Diller's strategic acquisitions since the 1990s, IAC (NASDAQ: IAC) operates a portfolio of category-leading digital businesses including Dotdash Meredith, Angi, and Care.com, focusing on digital publishing, home services, and caregiving platforms.
Why Do We Steer Clear of IAC?
- Customers postponed purchases of its products and services this cycle as its revenue declined by 20.4% annually over the last two years
- Earnings per share have dipped by 41.3% annually over the past four years, which is concerning because stock prices follow EPS over the long term
- Negative returns on capital show management lost money while trying to expand the business
IAC is trading at $34.38 per share, or 21x forward P/E. Dive into our free research report to see why there are better opportunities than IAC.
One Stock to Buy:
GitLab (GTLB)
Trailing 12-Month Free Cash Flow Margin: 25.9%
With its all-remote workforce pioneering a new approach to software development, GitLab (NASDAQ: GTLB) provides a single-application DevSecOps platform that helps development, operations, and security teams collaborate to build, secure, and deploy software faster.
Why Are We Bullish on GTLB?
- ARR growth averaged 30.9% over the last year, showing customers are willing to take multi-year bets on its software
- Software is difficult to replicate at scale and results in a best-in-class gross margin of 88.5%
- Robust free cash flow margin of 25.9% gives it many options for capital deployment
GitLab’s stock price of $44.05 implies a valuation ratio of 7.1x forward price-to-sales. Is now a good time to buy? See for yourself 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-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
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