A company that generates cash isn’t automatically a winner. Some businesses stockpile cash but fail to reinvest wisely, limiting their ability to expand.
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 excels at turning cash into shareholder value and two that may struggle to keep up.
Two Stocks to Sell:
Sally Beauty (SBH)
Trailing 12-Month Free Cash Flow Margin: 4.7%
Catering to both everyday consumers as well as salon professionals, Sally Beauty (NYSE: SBH) is a retailer that sells salon-quality beauty products such as makeup and haircare products.
Why Do We Pass on SBH?
- Absence of new stores indicates weak demand as management focuses on improving existing location performance
- Lagging same-store sales over the past two years suggest it might have to change its pricing and marketing strategy to stimulate demand
- Revenue base of $3.70 billion puts it at a disadvantage compared to larger competitors exhibiting economies of scale
Sally Beauty’s stock price of $15.86 implies a valuation ratio of 7.7x forward P/E. If you’re considering SBH for your portfolio, see our FREE research report to learn more.
Teleflex (TFX)
Trailing 12-Month Free Cash Flow Margin: 8.4%
With a portfolio spanning from vascular access catheters to minimally invasive surgical tools, Teleflex (NYSE: TFX) designs, manufactures, and supplies single-use medical devices used in critical care and surgical procedures across hospitals worldwide.
Why Are We Cautious About TFX?
- Constant currency revenue growth has disappointed over the past two years and shows demand was soft
- 12.1 percentage point decline in its free cash flow margin over the last five years reflects the company’s increased investments to defend its market position
- Diminishing returns on capital from an already low starting point show that neither management’s prior nor current bets are going as planned
Teleflex is trading at $113.58 per share, or 7.7x forward P/E. To fully understand why you should be careful with TFX, check out our full research report (it’s free for active Edge members).
One Stock to Watch:
Confluent (CFLT)
Trailing 12-Month Free Cash Flow Margin: 2.8%
Built by the original creators of Apache Kafka, the popular open-source messaging system, Confluent (NASDAQ: CFLT) provides a data infrastructure platform that enables organizations to connect their applications, systems, and data layers around real-time data streams.
Why Does CFLT Stand Out?
- Winning new contracts that can potentially increase in value as its billings growth has averaged 26.1% over the last year
- Estimated revenue growth of 16.7% for the next 12 months implies its momentum over the last two years will continue
- Gross margin of 74.1% provides the financial cushion needed to invest in marketing and develop new products
At $22.13 per share, Confluent trades at 5.9x forward price-to-sales. Is now the right time to buy? Find out in our full research report, it’s free for active Edge members.
High-Quality Stocks for All Market Conditions
If your portfolio success hinges on just 4 stocks, your wealth is built on fragile ground. You have a small window to secure high-quality assets before the market widens and these prices disappear.
Don’t wait for the next volatility shock. Check out 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-small-cap company Comfort Systems (+782% 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
StockStory is growing and hiring equity analyst and marketing roles. Are you a 0 to 1 builder passionate about the markets and AI? See the open roles here.
