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. Keeping that in mind, here is one cash-producing company that excels at turning cash into shareholder value and two best left off your watchlist.
Two Stocks to Sell:
Dine Brands (DIN)
Trailing 12-Month Free Cash Flow Margin: 10.9%
Operating a franchise model, Dine Brands (NYSE: DIN) is a casual restaurant chain that owns the Applebee’s and IHOP banners.
Why Do We Steer Clear of DIN?
- Lagging same-store sales over the past two years suggest it might have to change its pricing and marketing strategy to stimulate demand
- Expenses have increased as a percentage of revenue over the last year as its operating margin fell by 4.6 percentage points
- High net-debt-to-EBITDA ratio of 6× increases the risk of forced asset sales or dilutive financing if operational performance weakens
Dine Brands is trading at $20.75 per share, or 4.1x forward P/E. Dive into our free research report to see why there are better opportunities than DIN.
Orion (ORN)
Trailing 12-Month Free Cash Flow Margin: 2.2%
Established in 1994, Orion (NYSE: ORN) provides construction services for marine infrastructure and industrial projects.
Why Do We Avoid ORN?
- Backlog has dropped by 1.7% on average over the past two years, suggesting it’s losing orders as competition picks up
- Competitive supply chain dynamics and steep production costs are reflected in its low gross margin of 9.3%
- Negative free cash flow raises questions about the return timeline for its investments
Orion’s stock price of $7.12 implies a valuation ratio of 30.1x forward P/E. To fully understand why you should be careful with ORN, check out our full research report (it’s free).
One Stock to Buy:
Super Micro (SMCI)
Trailing 12-Month Free Cash Flow Margin: 7%
Founded in Silicon Valley in 1993 and known for its modular "building block" approach to server design, Super Micro Computer (NASDAQ: SMCI) designs and manufactures high-performance, energy-efficient server and storage systems for data centers, cloud computing, AI, and edge computing applications.
Why Is SMCI a Good Business?
- Impressive 75.6% annual revenue growth over the last two years indicates it’s winning market share this cycle
- Unparalleled revenue scale of $21.97 billion gives it an edge in distribution
- Free cash flow margin is now positive, indicating the company has achieved financial self-sustainability
At $46.60 per share, Super Micro trades at 16.9x forward P/E. Is now a good time to buy? 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 9 Market-Beating Stocks. 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 Tecnoglass (+1,754% 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
StockStory is growing and hiring equity analyst and marketing roles. Are you a 0 to 1 builder passionate about the markets and AI? See the open roles here.
