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 face some trouble.

Two Stocks to Sell:

HNI (HNI)

Trailing 12-Month Free Cash Flow Margin: 7.4%

With roots dating back to 1944 and a significant acquisition of Kimball International in 2023, HNI (NYSE: HNI) manufactures and sells office furniture systems, seating, and storage solutions, as well as residential fireplaces and heating products.

Why Is HNI Not Exciting?

1. Muted 2.7% annual revenue growth over the last five years shows its demand lagged behind its business services peers
2. Performance over the past five years shows its incremental sales were less profitable as its earnings per share were flat
3. Capital intensity has ramped up over the last five years as its free cash flow margin decreased by 3.2 percentage points

At $49.18 per share, HNI trades at 13.9x forward P/E. To fully understand why you should be careful with HNI, check out our full research report (it’s free).

Dynex Capital (DX)

Trailing 12-Month Free Cash Flow Margin: 144%

Operating in the financial markets since 1988 with a focus on capital preservation during economic turbulence, Dynex Capital (NYSE: DX) is a mortgage real estate investment trust that invests primarily in government-backed residential mortgage securities to generate income for shareholders.

Why Does DX Fall Short?

1. Sales tumbled by 45.9% annually over the last four years, showing market trends are working against its favor during this cycle
2. Earnings per share have dipped by 34% annually over the past five years, which is concerning because stock prices follow EPS over the long term
3. Tangible book value per share tumbled by 5.1% annually over the last five years, showing bank sector trends are working against its favor during this cycle

Dynex Capital’s stock price of $12.22 implies a valuation ratio of 1x forward P/B. Check out our free in-depth research report to learn more about why DX doesn’t pass our bar.

One Stock to Buy:

The Trade Desk (TTD)

Trailing 12-Month Free Cash Flow Margin: 26.7%

Founded by former Microsoft engineers Jeff Green and Dave Pickles, The Trade Desk (NASDAQ: TTD) offers cloud-based software that uses data to help advertisers better plan, place, and target their online ads.

Why Is TTD a Top Pick?

1. Billings have averaged 26.1% growth over the last year, showing it’s securing new contracts that could potentially increase in value over time
2. Software platform has product-market fit given the rapid recovery of its customer acquisition costs
3. Healthy operating margin of 17.6% shows it’s a well-run company with efficient processes, and its rise over the last year was fueled by some leverage on its fixed costs

The Trade Desk is trading at $72.09 per share, or 12.2x forward price-to-sales. Is now the right time to buy? Find out in our full research report, it’s free.

High-Quality Stocks for All Market Conditions

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 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-micro-cap company Kadant (+351% 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