A company that generates cash isn’t automatically a winner. Some businesses stockpile cash but fail to reinvest wisely, limiting their ability to expand.

Cash flow is valuable, but it’s not everything - StockStory helps you identify the companies that truly put it to work. Keeping that in mind, here is one cash-producing company that reinvests wisely to drive long-term success and two that may face some trouble.

Two Stocks to Sell:

H&R Block (HRB)

Trailing 12-Month Free Cash Flow Margin: 15.3%

Founded in 1955 by brothers Henry W. Bloch and Richard A. Bloch, H&R Block (NYSE: HRB) is a tax preparation company offering professional tax assistance and financial solutions to individuals and small businesses.

Why Is HRB Not Exciting?

1. Lackluster 4.2% annual revenue growth over the last two years indicates the company is losing ground to competitors
2. Demand will likely be soft over the next 12 months as Wall Street’s estimates imply tepid growth of 3.2%

H&R Block’s stock price of $43.36 implies a valuation ratio of 8.8x forward P/E. Dive into our free research report to see why there are better opportunities than HRB.

Generac (GNRC)

Trailing 12-Month Free Cash Flow Margin: 9.7%

With its name deriving from a combination of “generating” and “AC”, Generac (NYSE: GNRC) offers generators and other power products for residential, industrial, and commercial use.

Why Are We Hesitant About GNRC?

1. 4.2% annual revenue growth over the last two years was slower than its industrials peers
2. Day-to-day expenses have swelled relative to revenue over the last five years as its operating margin fell by 9.5 percentage points
3. Waning returns on capital imply its previous profit engines are losing steam

Generac is trading at $140.81 per share, or 18.7x forward P/E. Read our free research report to see why you should think twice about including GNRC in your portfolio.

One Stock to Buy:

Zscaler (ZS)

Trailing 12-Month Free Cash Flow Margin: 27.2%

Pioneering the "zero trust" approach that has fundamentally changed enterprise network security, Zscaler (NASDAQ: ZS) provides a cloud-based security platform that connects users, devices, and applications securely without traditional network-based security hardware.

Why Will ZS Beat the Market?

1. Ability to secure long-term commitments with customers is evident in its 22.6% ARR growth over the last year
2. Estimated revenue growth of 22.6% for the next 12 months implies its momentum over the last two years will continue
3. Strong free cash flow margin of 27.2% enables it to reinvest or return capital consistently

At $281.08 per share, Zscaler trades at 13.4x forward price-to-sales. Is now a good time to buy? Find out in our full research report, it’s free for active Edge members.

High-Quality Stocks for All Market Conditions

Your portfolio can’t afford to be based on yesterday’s story. The risk in a handful of heavily crowded stocks is rising daily.

The names generating the next wave of massive growth are right here in 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 244% over the last five years (as of June 30, 2025).

Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,326% between June 2020 and June 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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