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.

Luckily for you, we built StockStory to help you separate the good from the bad. Keeping that in mind, 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:

APi (APG)

Trailing 12-Month Free Cash Flow Margin: 7.7%

Started in 1926 as an insulation contractor, APi (NYSE: APG) provides life safety solutions and specialty services for buildings and infrastructure.

Why Is APG Not Exciting?

1. Sales trends were unexciting over the last two years as its 4.2% annual growth was below the typical industrials company
2. Core business is underperforming as its organic revenue has disappointed over the past two years, suggesting it might need acquisitions to stimulate growth
3. ROIC of 3.3% reflects management’s challenges in identifying attractive investment opportunities

APi’s stock price of $34.82 implies a valuation ratio of 22.7x forward P/E. To fully understand why you should be careful with APG, check out our full research report (it’s free for active Edge members).

SAIC (SAIC)

Trailing 12-Month Free Cash Flow Margin: 4.7%

With over five decades of experience supporting national security missions, Science Applications International Corporation (NASDAQ: SAIC) provides technical, engineering, and enterprise IT services primarily to U.S. government agencies and military branches.

Why Should You Sell SAIC?

1. Customers postponed purchases of its products and services this cycle as its revenue declined by 1.5% annually over the last two years
2. Sales are projected to tank by 2.2% over the next 12 months as its demand continues evaporating
3. 2.5 percentage point decline in its free cash flow margin over the last five years reflects the company’s increased investments to defend its market position

SAIC is trading at $99.23 per share, or 11.6x forward P/E. If you’re considering SAIC for your portfolio, see our FREE research report to learn more.

One Stock to Watch:

Semrush (SEMR)

Trailing 12-Month Free Cash Flow Margin: 7.4%

Born from the need to make sense of the complex digital marketing landscape, Semrush (NYSE: SEMR) is a software-as-a-service platform that helps companies improve their online visibility, analyze digital marketing efforts, and optimize content across search engines and social media.

Why Are We Fans of SEMR?

1. Winning new contracts that can potentially increase in value as its billings growth has averaged 23% over the last year
2. Superior software functionality and low servicing costs lead to a premier gross margin of 81.4%
3. Free cash flow margin is on track to jump by 7.1 percentage points next year, meaning the company will have more resources to pursue growth initiatives, repurchase shares, or pay dividends

At $7.30 per share, Semrush trades at 2.3x forward price-to-sales. Is now a good time to buy? See for yourself in our in-depth research report, it’s free for active Edge members.

Stocks We Like Even More

Donald Trump’s April 2025 "Liberation Day" tariffs sent markets into a tailspin, but stocks have since rebounded strongly, proving that knee-jerk reactions often create the best buying opportunities.

The smart money is already positioning for the next leg up. Don’t miss out on the recovery - check out our Top 5 Strong Momentum 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-micro-cap company Tecnoglass (+1,754% 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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