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 excels at turning cash into shareholder value and two that may face some trouble.
Two Stocks to Sell:
Zillow (ZG)
Trailing 12-Month Free Cash Flow Margin: 14.4%
Founded by Expedia co-founders Lloyd Frink and Rich Barton, Zillow (NASDAQ: ZG) is the leading U.S. online real estate marketplace.
Why Should You Dump ZG?
- Annual revenue declines of 7.8% over the last five years indicate problems with its market positioning
- Suboptimal cost structure is highlighted by its history of operating margin losses
- Waning returns on capital from an already weak starting point displays the inefficacy of management’s past and current investment decisions
At $76.98 per share, Zillow trades at 40.9x forward P/E. If you’re considering ZG for your portfolio, see our FREE research report to learn more.
Graco (GGG)
Trailing 12-Month Free Cash Flow Margin: 28.1%
Founded in 1926, Graco (NYSE: GGG) is an industrial company specializing in the development and manufacturing of fluid-handling systems and products.
Why Are We Wary of GGG?
- Sales stagnated over the last two years and signal the need for new growth strategies
- Earnings per share have dipped by 1.4% annually over the past two years, which is concerning because stock prices follow EPS over the long term
- Waning returns on capital imply its previous profit engines are losing steam
Graco’s stock price of $85.35 implies a valuation ratio of 27.7x forward P/E. Check out our free in-depth research report to learn more about why GGG doesn’t pass our bar.
One Stock to Watch:
The Ensign Group (ENSG)
Trailing 12-Month Free Cash Flow Margin: 6%
Founded in 1999 and named after a naval term for a flag-bearing ship, The Ensign Group (NASDAQ: ENSG) operates skilled nursing facilities, senior living communities, and rehabilitation services across 15 states, primarily serving high-acuity patients recovering from various medical conditions.
Why Does ENSG Stand Out?
- Average unit sales growth of 12.2% over the past two years reflects steady demand for its products
- Forecasted revenue growth of 14.8% for the next 12 months indicates its momentum over the last two years is sustainable
- Earnings per share grew by 17.3% annually over the last five years and trumped its peers
The Ensign Group is trading at $163.54 per share, or 24.7x forward P/E. Is now the right time to buy? See for yourself in our in-depth research report, it’s free.
High-Quality Stocks for All Market Conditions
When Trump unveiled his aggressive tariff plan in April 2025, 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 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
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