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?
- New contracts were hard to come by as its average bookings growth of 8.1% over the last year underwhelmed
- Estimated sales growth of 6.9% for the next 12 months is soft and implies weaker demand
- 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?
- Sales trends were unexciting over the last two years as its 2.9% annual growth was below the typical consumer discretionary company
- 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?
- Operating margin expanded by 4.2 percentage points over the last five years as it scaled and became more efficient
- Share buybacks catapulted its annual earnings per share growth to 28.1%, which outperformed its revenue gains over the last five years
- 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.
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