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.
Luckily for you, we built StockStory to help you separate the good from the bad. That said, here are two cash-producing companies that reinvest wisely to drive long-term success and one best left off your watchlist.
One Stock to Sell:
PTC (PTC)
Trailing 12-Month Free Cash Flow Margin: 34.9%
Used to design the Airbus A380 and Boeing 787 Dreamliner commercial airplanes, PTC’s (NASDAQ: PTC) software-as-service platform helps engineers and designers create and test products before manufacturing.
Why Does PTC Fall Short?
- Annual revenue growth of 7.7% over the last three years was well below our standards for the software sector
- Products, pricing, or go-to-market strategy may need some adjustments as its 4.8% average billings growth over the last year was weak
- Extended payback periods on sales investments suggest the company’s platform isn’t resonating enough to drive efficient sales conversions
PTC’s stock price of $166 implies a valuation ratio of 7.7x forward price-to-sales. Read our free research report to see why you should think twice about including PTC in your portfolio.
Two Stocks to Watch:
Zscaler (ZS)
Trailing 12-Month Free Cash Flow Margin: 27.1%
After successfully selling all four of his previous cybersecurity companies, Jay Chaudhry's fifth venture, Zscaler (NASDAQ: ZS) offers software-as-a-service that helps companies securely connect to applications and networks in the cloud.
Why Does ZS Stand Out?
- ARR trends over the last year show it’s maintaining a steady flow of long-term contracts that contribute positively to its revenue predictability
- Estimated revenue growth of 19.9% for the next 12 months implies its momentum over the last three years will continue
- Robust free cash flow margin of 27.1% gives it many options for capital deployment
Zscaler is trading at $312.25 per share, or 15.7x forward price-to-sales. Is now the right time to buy? Find out in our full research report, it’s free.
Procter & Gamble (PG)
Trailing 12-Month Free Cash Flow Margin: 17.9%
Founded by candle maker William Procter and soap maker James Gamble, Proctor & Gamble (NYSE: PG) is a consumer products behemoth whose product portfolio spans everything from facial tissues to laundry detergent to feminine care to men’s grooming.
Why Could PG Be a Winner?
- Enormous revenue base of $83.93 billion provides significant negotiating leverage in retail partnerships
- Disciplined cost controls and effective management resulted in a strong two-year operating margin of 25.2%
- PG is a free cash flow machine with the flexibility to invest in growth initiatives or return capital to shareholders
At $160.96 per share, Procter & Gamble trades at 22.6x forward P/E. Is now a good time to buy? See for yourself in our in-depth research report, it’s free.
Stocks We Like Even More
Donald Trump’s victory in the 2024 U.S. Presidential Election sent major indices to all-time highs, but stocks have retraced as investors debate the health of the economy and the potential impact of tariffs.
While this leaves much uncertainty around 2025, a few companies are poised for long-term gains regardless of the political or macroeconomic climate, like our Top 5 Growth Stocks for this month. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-small-cap company Exlservice (+354% 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
