A company that generates cash isn’t automatically a winner. Some businesses stockpile cash but fail to reinvest wisely, limiting their ability to expand.
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 reinvests wisely to drive long-term success and two that may face some trouble.
Two Stocks to Sell:
Appian (APPN)
Trailing 12-Month Free Cash Flow Margin: 10.5%
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 Is APPN Not Exciting?
- Annual revenue growth of 14.6% over the last two years was below our standards for the software sector
- Competitive market means the company must spend more on sales and marketing to stand out even if the return on investment is low
- Capital intensity will likely increase as its free cash flow margin is anticipated to drop by 6 percentage points over the next year
At $39.83 per share, Appian trades at 3.9x forward price-to-sales. Read our free research report to see why you should think twice about including APPN in your portfolio.
Carriage Services (CSV)
Trailing 12-Month Free Cash Flow Margin: 11.5%
Established in 1991, Carriage Services (NYSE: CSV) is a provider of funeral and cemetery services in the United States.
Why Do We Think Twice About CSV?
- Lackluster 4.2% annual revenue growth over the last two years indicates the company is losing ground to competitors
- Demand will likely be soft over the next 12 months as Wall Street’s estimates imply tepid growth of 3.5%
- Underwhelming 10% return on capital reflects management’s difficulties in finding profitable growth opportunities
Carriage Services is trading at $41.15 per share, or 12.4x forward P/E. Check out our free in-depth research report to learn more about why CSV doesn’t pass our bar.
One Stock to Buy:
Datadog (DDOG)
Trailing 12-Month Free Cash Flow Margin: 26.9%
Named after a database the founders had to painstakingly look after at their previous company, Datadog (NASDAQ: DDOG) provides a software platform that helps organizations monitor and secure their cloud applications, infrastructure, and services.
Why Do We Love DDOG?
- ARR trends over the last year show it’s maintaining a steady flow of long-term contracts that contribute positively to its revenue predictability
- Projected revenue growth of 21.7% for the next 12 months suggests its momentum from the last two years will persist
- User-friendly software enables clients to ramp up spending quickly, leading to the speedy recovery of customer acquisition costs
Datadog’s stock price of $158.99 implies a valuation ratio of 14.8x forward price-to-sales. Is now a good time to buy? See for yourself in our in-depth research report, it’s free for active Edge members.
High-Quality Stocks for All Market Conditions
The market’s up big this year - but there’s a catch. Just 4 stocks account for half the S&P 500’s entire gain. That kind of concentration makes investors nervous, and for good reason. While everyone piles into the same crowded names, smart investors are hunting quality where no one’s looking - and paying a fraction of the price. Check out the high-quality names we’ve flagged in our Top 9 Market-Beating Stocks. 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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