A company that generates cash isn’t automatically a winner. Some businesses stockpile cash but fail to reinvest wisely, limiting their ability to expand.

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 struggle to keep up.

Two Stocks to Sell:

Paychex (PAYX)

Trailing 12-Month Free Cash Flow Margin: 33%

Once known as the go-to service for small business payroll needs, Paychex (NASDAQ: PAYX) provides payroll processing, HR services, employee benefits administration, and insurance solutions to small and medium-sized businesses.

Why Are We Hesitant About PAYX?

1. Muted 6.7% annual revenue growth over the last two years shows its demand lagged behind its software peers
2. Expenses have increased as a percentage of revenue over the last year as its operating margin fell by 3.1 percentage points
3. Capital intensity will likely ramp up in the next year as its free cash flow margin is expected to contract by 5 percentage points

At $113.43 per share, Paychex trades at 6.1x forward price-to-sales. Read our free research report to see why you should think twice about including PAYX in your portfolio.

Merit Medical Systems (MMSI)

Trailing 12-Month Free Cash Flow Margin: 14%

Founded in 1987 and now offering over 1,700 patented products across global markets, Merit Medical Systems (NASDAQ: MMSI) manufactures and markets specialized medical devices used in minimally invasive procedures for cardiology, radiology, oncology, critical care, and endoscopy.

Why Does MMSI Worry Us?

1. Revenue base of $1.48 billion puts it at a disadvantage compared to larger competitors exhibiting economies of scale
2. Below-average returns on capital indicate management struggled to find compelling investment opportunities

Merit Medical Systems is trading at $84.29 per share, or 21.6x forward P/E. If you’re considering MMSI for your portfolio, see our FREE research report to learn more.

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?

1. Products are seeing elevated demand as its unit sales averaged 11.8% growth over the past two years
2. Projected revenue growth of 15.5% for the next 12 months suggests its momentum from the last two years will persist
3. Earnings per share have massively outperformed its peers over the last five years, increasing by 15.5% annually

The Ensign Group’s stock price of $178.96 implies a valuation ratio of 25.6x forward P/E. Is now the time to initiate a position? Find out in our full research report, it’s free for active Edge members.

High-Quality Stocks for All Market Conditions

If your portfolio success hinges on just 4 stocks, your wealth is built on fragile ground. You have a small window to secure high-quality assets before the market widens and these prices disappear.

Don’t wait for the next volatility shock. Check out our Top 6 Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 244% over the last five years (as of June 30, 2025).

Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,326% between June 2020 and June 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

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.