Generating cash is essential for any business, but not all cash-rich companies are great investments. Some produce plenty of cash but fail to allocate it effectively, leading to missed opportunities.

Luckily for you, we built StockStory to help you separate the good from the bad. That said, 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:

MillerKnoll (MLKN)

Trailing 12-Month Free Cash Flow Margin: 5.4%

Created through the 2021 merger of industry icons Herman Miller and Knoll, MillerKnoll (NASDAQ: MLKN) designs, manufactures, and distributes interior furnishings for offices, healthcare facilities, educational settings, and homes worldwide.

Why Do We Pass on MLKN?

1. Customers postponed purchases of its products and services this cycle as its revenue declined by 7.8% annually over the last two years
2. Performance over the past five years shows its incremental sales were much less profitable, as its earnings per share fell by 9.6% annually
3. Capital intensity has ramped up over the last five years as its free cash flow margin decreased by 4.7 percentage points

MillerKnoll is trading at $16.44 per share, or 6.8x forward P/E. To fully understand why you should be careful with MLKN, check out our full research report (it’s free).

U.S. Cellular (USM)

Trailing 12-Month Free Cash Flow Margin: 9.8%

Operating as a majority-owned subsidiary of Telephone and Data Systems since its founding in 1983, US Cellular (NYSE: USM) is a regional wireless telecommunications provider serving 4.6 million customers across 21 states with mobile phone, internet, and IoT services.

Why Do We Think USM Will Underperform?

1. Customers postponed purchases of its products and services this cycle as its revenue declined by 1.6% annually over the last five years
2. Adjusted operating profits fell over the last five years as its sales dropped and it struggled to adjust its fixed costs
3. Falling earnings per share over the last five years has some investors worried as stock prices ultimately follow EPS over the long term

At $62.77 per share, U.S. Cellular trades at 5.6x forward EV-to-EBITDA. Read our free research report to see why you should think twice about including USM in your portfolio.

One Stock to Watch:

Autodesk (ADSK)

Trailing 12-Month Free Cash Flow Margin: 25.6%

Founded in 1982 by John Walker and growing into one of the industry's behemoths, Autodesk (NASDAQ: ADSK) makes computer-aided design (CAD) software for engineering, construction, and architecture companies.

Why Do We Like ADSK?

1. Winning new contracts that can potentially increase in value as its billings growth has averaged 14.7% over the last year
2. Superior software functionality and low servicing costs lead to a best-in-class gross margin of 92%
3. Software platform has product-market fit given the rapid recovery of its customer acquisition costs

Autodesk’s stock price of $289.62 implies a valuation ratio of 9.1x forward price-to-sales. Is now a good time to buy? See for yourself in our in-depth research report, it’s free.

Stocks We Like Even More

Market indices reached historic highs following Donald Trump’s presidential victory in November 2024, but the outlook for 2025 is clouded by new trade policies that could impact business confidence and growth.

While this has caused many investors to adopt a "fearful" wait-and-see approach, we’re leaning into our best ideas that can grow regardless of the political or macroeconomic climate. Take advantage of Mr. Market by checking out our Top 9 Market-Beating Stocks. This is a curated list of our High Quality stocks that have generated a market-beating return of 175% over the last five years.

Stocks that made our list in 2019 include now familiar names such as Nvidia (+2,183% between December 2019 and December 2024) as well as under-the-radar businesses like Sterling Infrastructure (+1,096% five-year return). Find your next big winner with StockStory today for free.