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 excels at turning cash into shareholder value and two best left off your watchlist.

Two Stocks to Sell:

Labcorp (LH)

Trailing 12-Month Free Cash Flow Margin: 9.4%

With over 600 million tests performed annually and involvement in 90% of FDA-approved drugs in 2023, Labcorp (NYSE: LH) provides laboratory testing services and drug development solutions to doctors, hospitals, pharmaceutical companies, and patients worldwide.

Why Are We Wary of LH?

1. Core business is underperforming as its organic revenue has disappointed over the past two years, suggesting it might need acquisitions to stimulate growth
2. Expenses have increased as a percentage of revenue over the last five years as its adjusted operating margin fell by 14.3 percentage points
3. Shrinking returns on capital suggest that increasing competition is eating into the company’s profitability

Labcorp is trading at $275.05 per share, or 16.4x forward P/E. Check out our free in-depth research report to learn more about why LH doesn’t pass our bar.

Premier (PINC)

Trailing 12-Month Free Cash Flow Margin: 31.5%

Operating one of the largest healthcare group purchasing organizations in the United States with over 4,350 hospital members, Premier (NASDAQ: PINC) is a technology-driven healthcare improvement company that helps hospitals, health systems, and other providers reduce costs and improve clinical outcomes.

Why Do We Avoid PINC?

1. Annual sales declines of 12.9% for the past two years show its products and services struggled to connect with the market during this cycle
2. Adjusted operating profits fell over the last two years as its sales dropped and it struggled to adjust its fixed costs
3. Issuance of new shares over the last five years caused its earnings per share to fall by 11.8% annually, even worse than its revenue declines

Premier’s stock price of $27.86 implies a valuation ratio of 20.1x forward P/E. Dive into our free research report to see why there are better opportunities than PINC.

One Stock to Watch:

WD-40 (WDFC)

Trailing 12-Month Free Cash Flow Margin: 13.3%

Short for “Water Displacement perfected on the 40th try”, WD-40 (NASDAQ: WDFC) is a renowned American consumer goods company known for its iconic and versatile spray, WD-40 Multi-Use Product.

Why Does WDFC Catch Our Eye?

1. Products command premium prices and lead to a top-tier gross margin of 53.8%
2. Strong free cash flow margin of 15.4% enables it to reinvest or return capital consistently
3. Industry-leading 27.5% return on capital demonstrates management’s skill in finding high-return investments

At $191.56 per share, WD-40 trades at 32.2x forward P/E. Is now the time to initiate a position? See for yourself in our comprehensive research report, it’s free for active Edge members .

Stocks We Like Even More

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 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 Kadant (+351% 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.