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 that may struggle to keep up.
Two Stocks to Sell:
Cable One (CABO)
Trailing 12-Month Free Cash Flow Margin: 20.5%
Founded in 1986, Cable One (NYSE: CABO) provides high-speed internet, cable television, and telephone services, primarily in smaller markets across the United States.
Why Should You Dump CABO?
- Performance surrounding its residential data subscribers has lagged its peers
- Forecasted revenue decline of 3% for the upcoming 12 months implies demand will fall even further
- Diminishing returns on capital from an already low starting point show that neither management’s prior nor current bets are going as planned
Cable One’s stock price of $163.78 implies a valuation ratio of 4.7x forward P/E. Dive into our free research report to see why there are better opportunities than CABO.
Terex (TEX)
Trailing 12-Month Free Cash Flow Margin: 4.6%
With humble beginnings as a dump truck company, Terex (NYSE: TEX) today manufactures lifting and material handling equipment designed to move and hoist heavy goods and materials.
Why Does TEX Give Us Pause?
- Organic sales performance over the past two years indicates the company may need to make strategic adjustments or rely on M&A to catalyze faster growth
- Incremental sales over the last two years were much less profitable as its earnings per share fell by 16.3% annually while its revenue grew
- Capital intensity has ramped up over the last five years as its free cash flow margin decreased by 5.4 percentage points
At $51.10 per share, Terex trades at 10.3x forward P/E. Check out our free in-depth research report to learn more about why TEX doesn’t pass our bar.
One Stock to Buy:
Reddit (RDDT)
Trailing 12-Month Free Cash Flow Margin: 23.8%
Founded in 2005 by two University of Virginia roommates, Reddit (NYSE: RDDT) facilitates user-generated content across niche communities (called subreddits) that discuss anything from stocks to dating and memes.
Why Is RDDT a Top Pick?
- Domestic Daily Active Visitors are rising, meaning the company can increase revenue without incurring additional customer acquisition costs if it can cross-sell additional products and features
- Earnings per share grew by 38.6% annually over the last three years, massively outpacing its peers
- Free cash flow margin expanded by 35.1 percentage points over the last few years, providing additional flexibility for investments and share buybacks/dividends
Reddit is trading at $217 per share, or 56.7x forward EV/EBITDA. Is now a good time to buy? Find out in our full research report, it’s free.
Stocks We Like Even More
Trump’s April 2025 tariff bombshell triggered a massive market selloff, but stocks have since staged an impressive recovery, leaving those who panic sold on the sidelines.
Take advantage of the rebound by checking out our 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. Find your next big winner with StockStory today. Find your next big winner with StockStory today
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