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 leverages its financial strength to beat its competitors and two that may struggle to keep up.

Two Stocks to Sell:

PagerDuty (PD)

Trailing 12-Month Free Cash Flow Margin: 22.2%

Born from the frustration of developers being woken up by unprioritized alerts, PagerDuty (NYSE: PD) is a digital operations management platform that helps organizations detect and respond to IT incidents, outages, and other critical issues in real-time.

Why Does PD Fall Short?

1. Products, pricing, or go-to-market strategy may need some adjustments as its 5.9% average billings growth over the last year was weak
2. Estimated sales growth of 5.8% for the next 12 months implies demand will slow from its two-year trend
3. Poor expense management has led to operating margin losses

At $15.52 per share, PagerDuty trades at 2.9x forward price-to-sales. Check out our free in-depth research report to learn more about why PD doesn’t pass our bar.

Zumiez (ZUMZ)

Trailing 12-Month Free Cash Flow Margin: 1.4%

With store associates called “Zumiez Stash Members”, Zumiez (NASDAQ: ZUMZ) is a specialty retailer of street and skate apparel, footwear, and accessories.

Why Do We Steer Clear of ZUMZ?

1. Weak same-store sales trends over the past two years suggest there may be few opportunities in its core markets to open new locations
2. Revenue base of $900.3 million puts it at a disadvantage compared to larger competitors exhibiting economies of scale
3. Persistent operating margin losses suggest the business manages its expenses poorly

Zumiez’s stock price of $20.81 implies a valuation ratio of 40x forward P/E. To fully understand why you should be careful with ZUMZ, check out our full research report (it’s free for active Edge members).

One Stock to Watch:

Trupanion (TRUP)

Trailing 12-Month Free Cash Flow Margin: 4.5%

Born from a vision to help pet owners avoid economic euthanasia when faced with expensive veterinary bills, Trupanion (NASDAQ: TRUP) provides medical insurance for cats and dogs through data-driven, vertically-integrated products priced specifically for each pet's unique characteristics.

Why Is TRUP Interesting?

1. Annual revenue growth of 16.2% over the past two years was outstanding, reflecting market share gains this cycle
2. Incremental sales over the last two years have been highly profitable as its earnings per share increased by 143% annually, topping its revenue gains
3. Impressive 15.5% annual book value per share growth over the last five years indicates it’s building equity value this cycle

Trupanion is trading at $42.45 per share, or 4.9x forward P/B. Is now a good time to buy? Find out in our full research report, it’s free for active Edge members.

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 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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