1 Cash-Producing Stock to Target This Week and 2 We Brush Off

August 15, 2025 at 00:38 AM EDT

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Generating cash is essential for any business, but not all cash-rich companies are great investments. Some produce plenty of cash but fail to allocate it effectively, leading to missed opportunities.

Not all companies are created equal, and StockStory is here to surface the ones with real upside. Keeping that in mind, 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:

Designer Brands (DBI)

Trailing 12-Month Free Cash Flow Margin: 1.3%

Founded in 1969 as a shoe importer and distributor, Designer Brands (NYSE: DBI) is an American discount retailer focused on footwear and accessories.

Why Should You Sell DBI?

Disappointing same-store sales over the past two years show customers aren’t responding well to its product selection and store experience
Underwhelming 2.7% return on capital reflects management’s difficulties in finding profitable growth opportunities
High net-debt-to-EBITDA ratio of 11× could force the company to raise capital at unfavorable terms if market conditions deteriorate

At $3.43 per share, Designer Brands trades at 13.8x forward P/E. If you’re considering DBI for your portfolio, see our FREE research report to learn more.

Chemed (CHE)

Trailing 12-Month Free Cash Flow Margin: 14.8%

With a unique business model combining end-of-life care and household services, Chemed (NYSE: CHE) operates two distinct businesses: VITAS, which provides hospice care for terminally ill patients, and Roto-Rooter, which offers plumbing and water restoration services.

Why Are We Wary of CHE?

Annual revenue growth of 4.4% over the last five years was below our standards for the healthcare sector
Expenses have increased as a percentage of revenue over the last five years as its adjusted operating margin fell by 2.7 percentage points
Eroding returns on capital suggest its historical profit centers are aging

Chemed is trading at $443.87 per share, or 17.7x forward P/E. To fully understand why you should be careful with CHE, check out our full research report (it’s free).

One Stock to Watch:

Confluent (CFLT)

Trailing 12-Month Free Cash Flow Margin: 1.5%

Started in 2014 by the team of engineers at LinkedIn who originally built it as an internal tool, Confluent (NASDAQ: CFLT) provides infrastructure software for organizations that makes it easy and fast to collect and move large amounts of data between different systems.

Why Do We Like CFLT?

Billings have averaged 32.6% growth over the last year, showing it’s securing new contracts that could potentially increase in value over time
Projected revenue growth of 16.3% for the next 12 months suggests its momentum from the last three years will persist
Free cash flow margin is on track to jump by 5.6 percentage points next year, meaning the company will have more resources to pursue growth initiatives, repurchase shares, or pay dividends

Confluent’s stock price of $17.85 implies a valuation ratio of 4.9x forward price-to-sales. 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

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