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.

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 best left off your watchlist.

Two Stocks to Sell:

GoDaddy (GDDY)

Trailing 12-Month Free Cash Flow Margin: 31.7%

Known for its memorable Super Bowl commercials that put it on the map, GoDaddy (NYSE: GDDY) is a domain registrar and web services provider that helps entrepreneurs establish an online presence through domain registration, website building, hosting, and e-commerce tools.

Why Do We Steer Clear of GDDY?

1. New contracts were hard to come by as its average bookings growth of 8.1% over the last year underwhelmed
2. Estimated sales growth of 6.9% for the next 12 months is soft and implies weaker demand
3. Gross margin of 64% reflects its relatively high servicing costs

GoDaddy’s stock price of $141.40 implies a valuation ratio of 3.9x forward price-to-sales. Read our free research report to see why you should think twice about including GDDY in your portfolio.

Perdoceo Education (PRDO)

Trailing 12-Month Free Cash Flow Margin: 26.7%

Formerly known as Career Education Corporation, Perdoceo Education (NASDAQ: PRDO) is an educational services company that specializes in postsecondary education.

Why Is PRDO Not Exciting?

1. Sales trends were unexciting over the last two years as its 2.9% annual growth was below the typical consumer discretionary company
2. Eroding returns on capital suggest its historical profit centers are aging

At $37.15 per share, Perdoceo Education trades at 23.6x forward EV-to-EBITDA. If you’re considering PRDO for your portfolio, see our FREE research report to learn more.

One Stock to Watch:

W.W. Grainger (GWW)

Trailing 12-Month Free Cash Flow Margin: 8.1%

Founded as a supplier of motors, W.W. Grainger (NYSE: GWW) provides maintenance, repair, and operating (MRO) supplies and services to businesses and institutions.

Why Are We Fans of GWW?

1. Operating margin expanded by 4.2 percentage points over the last five years as it scaled and became more efficient
2. Share buybacks catapulted its annual earnings per share growth to 28.1%, which outperformed its revenue gains over the last five years
3. ROIC punches in at 36.7%, illustrating management’s expertise in identifying profitable investments, and its returns are growing as it capitalizes on even better market opportunities

W.W. Grainger is trading at $960.62 per share, or 22.4x forward P/E. 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

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).

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