A company that generates cash isn’t automatically a winner. Some businesses stockpile cash but fail to reinvest wisely, limiting their ability to expand.
Not all companies are created equal, and StockStory is here to surface the ones with real upside. That said, here is one cash-producing company that reinvests wisely to drive long-term success and two that may struggle to keep up.
Two Stocks to Sell:
Frontdoor (FTDR)
Trailing 12-Month Free Cash Flow Margin: 15.5%
Established in 2018 as a spin-off from ServiceMaster Global Holdings, Frontdoor (NASDAQ: FTDR) is a provider of home warranty and service plans.
Why Is FTDR Not Exciting?
- Lackluster 6.8% annual revenue growth over the last five years indicates the company is losing ground to competitors
- Sluggish trends in its home service plans suggest customers aren’t adopting its solutions as quickly as the company hoped
- Demand will likely be soft over the next 12 months as Wall Street’s estimates imply tepid growth of 8.5%
At $66.22 per share, Frontdoor trades at 18.4x forward P/E. Check out our free in-depth research report to learn more about why FTDR doesn’t pass our bar.
General Motors (GM)
Trailing 12-Month Free Cash Flow Margin: 7.7%
Founded in 1908 by William C. Durant, General Motors (NYSE: GM) offers a range of vehicles and automobiles through brands such as Chevrolet, Buick, GMC, and Cadillac.
Why Do We Think Twice About GM?
- Underwhelming unit sales over the past two years imply it may need to invest in improvements to get back on track
- Capital intensity has ramped up over the last five years as its free cash flow margin decreased by 7.9 percentage points
- High net-debt-to-EBITDA ratio of 5× increases the risk of forced asset sales or dilutive financing if operational performance weakens
General Motors is trading at $58.53 per share, or 6.4x forward P/E. To fully understand why you should be careful with GM, check out our full research report (it’s free).
One Stock to Buy:
RB Global (RBA)
Trailing 12-Month Free Cash Flow Margin: 14.4%
Born from the 1958 founding of Ritchie Bros. Auctioneers and rebranded in 2023, RB Global (NYSE: RBA) operates global marketplaces that connect buyers and sellers of commercial assets, vehicles, and equipment across multiple industries.
Why Are We Bullish on RBA?
- Annual revenue growth of 33.6% over the last two years was superb and indicates its market share increased during this cycle
- Earnings growth has trumped its peers over the last five years as its EPS has compounded at 20.6% annually
- Impressive free cash flow profitability enables the company to fund new investments or reward investors with share buybacks/dividends
RB Global’s stock price of $117.15 implies a valuation ratio of 28.6x forward P/E. Is now the time to initiate a position? See for yourself in our full 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 6 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 Comfort Systems (+782% 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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