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. That said, here is one cash-producing company that leverages its financial strength to beat its competitors and two that may struggle to keep up.
Two Stocks to Sell:
GE HealthCare (GEHC)
Trailing 12-Month Free Cash Flow Margin: 6.9%
Spun off from industrial giant General Electric in 2023 after over a century as its healthcare division, GE HealthCare (NASDAQ: GEHC) provides medical imaging equipment, patient monitoring systems, diagnostic pharmaceuticals, and AI-enabled healthcare solutions to hospitals and clinics worldwide.
Why Are We Hesitant About GEHC?
- Organic revenue growth fell short of our benchmarks over the past two years and implies it may need to improve its products, pricing, or go-to-market strategy
- Performance over the past four years shows its incremental sales were much less profitable, as its earnings per share fell by 3.8% annually
- Free cash flow margin dropped by 7.2 percentage points over the last five years, implying the company became more capital intensive as competition picked up
GE HealthCare’s stock price of $78.07 implies a valuation ratio of 15.9x forward P/E. Check out our free in-depth research report to learn more about why GEHC doesn’t pass our bar.
Fastly (FSLY)
Trailing 12-Month Free Cash Flow Margin: 5%
Taking its name from the core advantage it delivers to customers, Fastly (NYSE: FSLY) operates an edge cloud platform that processes, secures, and delivers web content as close to end users as possible, enabling faster digital experiences.
Why Do We Steer Clear of FSLY?
- Struggled to drive increased usage of its software, demonstrated by its subpar 103% net revenue retention rate
- Gross margin of 55% reflects its high servicing costs
- Historical operating margin losses point to an inefficient cost structure
At $11.77 per share, Fastly trades at 2.5x forward price-to-sales. To fully understand why you should be careful with FSLY, check out our full research report (it’s free for active Edge members).
One Stock to Buy:
Lululemon (LULU)
Trailing 12-Month Free Cash Flow Margin: 10.7%
Originally serving yogis and hockey players, Lululemon (NASDAQ: LULU) is a designer, distributor, and retailer of athletic apparel for men and women.
Why Are We Bullish on LULU?
- Same-store sales growth averaged 5.3% over the past two years, showing it’s bringing new and repeat shoppers into its stores
- Differentiated product assortment leads to a best-in-class gross margin of 58.8%
- LULU is a free cash flow machine with the flexibility to invest in growth initiatives or return capital to shareholders
Lululemon is trading at $169.86 per share, or 13.8x forward P/E. Is now the right time to buy? See for yourself in our comprehensive research report, it’s free for active Edge members .
Stocks We Like Even More
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 6 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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