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. That said, here is one cash-producing company that leverages its financial strength to beat its competitors and two best left off your watchlist.
Two Stocks to Sell:
BJ's (BJ)
Trailing 12-Month Free Cash Flow Margin: 1.4%
Appealing to the budget-conscious individual shopping for a household, BJ’s Wholesale Club (NYSE: BJ) is a membership-only retail chain that sells groceries, appliances, electronics, and household items, often in bulk quantities.
Why Are We Cautious About BJ?
- Weak same-store sales trends over the past two years suggest there may be few opportunities in its core markets to open new locations
- Gross margin of 18.3% is below its competitors, leaving less money for marketing and promotions
- Subpar operating margin of 3.9% constrains its ability to invest in process improvements or effectively respond to new competitive threats
BJ’s stock price of $106.90 implies a valuation ratio of 24.2x forward P/E. Read our free research report to see why you should think twice about including BJ in your portfolio.
Taboola (TBLA)
Trailing 12-Month Free Cash Flow Margin: 8.8%
Often appearing as those "You May Also Like" or "Recommended For You" boxes at the bottom of news articles, Taboola (NASDAQ: TBLA) operates a digital platform that recommends personalized content to users across publisher websites, helping both publishers monetize their sites and advertisers reach target audiences.
Why Is TBLA Not Exciting?
- Earnings per share have dipped by 41.7% annually over the past three years, which is concerning because stock prices follow EPS over the long term
- Significant 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
Taboola is trading at $3.21 per share, or 6.1x forward EV-to-EBITDA. If you’re considering TBLA for your portfolio, see our FREE research report to learn more.
One Stock to Buy:
O'Reilly (ORLY)
Trailing 12-Month Free Cash Flow Margin: 10.1%
Serving both the DIY customer and professional mechanic, O’Reilly Automotive (NASDAQ: ORLY) is an auto parts and accessories retailer that sells everything from fuel pumps to car air fresheners to mufflers.
Why Should You Buy ORLY?
- Comparable store sales rose by 3.9% on average over the past two years, demonstrating its ability to drive increased spending at existing locations
- Unique assortment of products and pricing power lead to a best-in-class gross margin of 51.3%
- Impressive free cash flow profitability enables the company to fund new investments or reward investors with share buybacks/dividends
At $98.65 per share, O'Reilly trades at 31.6x forward P/E. Is now the time to initiate a position? Find out in our full research report, it’s free.
High-Quality Stocks for All Market Conditions
When Trump unveiled his aggressive tariff plan in April 2024, markets tanked as investors feared a full-blown trade war. But those who panicked and sold missed the subsequent rebound that’s already erased most losses.
Don’t let fear keep you from great opportunities and take a look at 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 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.
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