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 best left off your watchlist.

Two Stocks to Sell:

DocuSign (DOCU)

Trailing 12-Month Free Cash Flow Margin: 31.3%

Creating the digital equivalent of "sign on the dotted line" for over a billion users worldwide, DocuSign (NASDAQ: DOCU) provides an agreement management platform that enables businesses to electronically prepare, sign, and manage documents and contracts.

Why Does DOCU Worry Us?

1. Average ARR growth of 8.4% over the last year has disappointed, suggesting it’s had a hard time winning long-term deals and renewals
2. Anticipated sales growth of 6.7% for the next year implies demand will be shaky
3. Operating margin improvement of 3.5 percentage points over the last year demonstrates its ability to scale efficiently

At $68 per share, DocuSign trades at 4.2x forward price-to-sales. Read our free research report to see why you should think twice about including DOCU in your portfolio.

G-III (GIII)

Trailing 12-Month Free Cash Flow Margin: 12.2%

Founded as a small leather goods business, G-III (NASDAQ: GIII) is a fashion and apparel conglomerate with a diverse portfolio of brands.

Why Should You Sell GIII?

1. Sales trends were unexciting over the last five years as its 5.8% annual growth was below the typical consumer discretionary company
2. Ability to fund investments or reward shareholders with increased buybacks or dividends is restricted by its weak free cash flow margin of 10.9% for the last two years
3. ROIC hasn’t moved, making investors question whether its recent investments can increase profitability

G-III’s stock price of $32.08 implies a valuation ratio of 11.6x forward P/E. If you’re considering GIII for your portfolio, see our FREE research report to learn more.

One Stock to Buy:

Moody's (MCO)

Trailing 12-Month Free Cash Flow Margin: 32%

Founded in 1900 during America's railroad boom when investors needed reliable information on bond risks, Moody's (NYSE: MCO) provides credit ratings, risk assessment tools, and analytical solutions that help organizations evaluate financial risks and make informed investment decisions.

Why Is MCO a Top Pick?

1. Solid 14.5% annual revenue growth over the last two years indicates its offering’s solve complex business issues
2. Share buybacks catapulted its annual earnings per share growth to 22.3%, which outperformed its revenue gains over the last two years
3. Market-beating return on equity illustrates that management has a knack for investing in profitable ventures

Moody's is trading at $499 per share, or 30.8x forward P/E. Is now a good time to buy? See for yourself in our in-depth 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 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.