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.
Cash flow is valuable, but it’s not everything - StockStory helps you identify the companies that truly put it to work. 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:
ACV Auctions (ACVA)
Trailing 12-Month Free Cash Flow Margin: 6.2%
Founded in 2014, ACV Auctions (NASDAQ: ACVA) is an online auction marketplace for car dealers and wholesalers to buy and sell used cars.
Why Are We Cautious About ACVA?
- High servicing costs result in an inferior gross margin of 27.4% that must be offset through higher volumes
- High marketing expenses suggest it needs to spend heavily on new customer acquisition to sustain momentum
- Poor free cash flow margin of 4.1% for the last two years limits its freedom to invest in growth initiatives, execute share buybacks, or pay dividends
ACV Auctions’s stock price of $6.75 implies a valuation ratio of 17.2x forward EV/EBITDA. Dive into our free research report to see why there are better opportunities than ACVA.
Thermo Fisher (TMO)
Trailing 12-Month Free Cash Flow Margin: 14%
With over 14,000 sales personnel and a portfolio spanning more than 2,500 technology manufacturers, Thermo Fisher Scientific (NYSE: TMO) provides scientific equipment, reagents, consumables, software, and laboratory services to pharmaceutical, biotech, academic, and healthcare customers worldwide.
Why Does TMO Fall Short?
- Sales were flat over the last two years, indicating it’s failed to expand this cycle
- Core business is underperforming as its organic revenue has disappointed over the past two years, suggesting it might need acquisitions to stimulate growth
- Costs have risen faster than its revenue over the last five years, causing its adjusted operating margin to decline by 9.2 percentage points
Thermo Fisher is trading at $586.42 per share, or 24.4x forward P/E. Check out our free in-depth research report to learn more about why TMO doesn’t pass our bar.
One Stock to Buy:
RB Global (RBA)
Trailing 12-Month Free Cash Flow Margin: 12.7%
Born from the 1958 founding of Ritchie Bros. Auctioneers and rebranded in 2023, RB Global (NYSE: RBA) operates global marketplaces that connect buyers and sellers of commercial assets, vehicles, and equipment across multiple industries.
Why Will RBA Outperform?
- Market share has increased this cycle as its 21.2% annual revenue growth over the last two years was exceptional
- Earnings per share grew by 18.7% annually over the last five years, massively outpacing its peers
- Impressive free cash flow profitability enables the company to fund new investments or reward investors with share buybacks/dividends
At $96.22 per share, RB Global trades at 23.3x forward P/E. Is now the right 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 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 Kadant (+351% 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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