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 face some trouble.
Two Stocks to Sell:
Concrete Pumping (BBCP)
Trailing 12-Month Free Cash Flow Margin: 9.8%
Going public via SPAC in 2018, Concrete Pumping (NASDAQ: BBCP) is a provider of concrete pumping and waste management services in the United States and the United Kingdom.
Why Does BBCP Fall Short?
- Core business is underperforming as its organic revenue has disappointed over the past two years, suggesting it might need acquisitions to stimulate growth
- Falling earnings per share over the last two years has some investors worried as stock prices ultimately follow EPS over the long term
- 9.7 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
Concrete Pumping’s stock price of $6.21 implies a valuation ratio of 13.3x forward price-to-earnings. Read our free research report to see why you should think twice about including BBCP in your portfolio.
Vestis (VSTS)
Trailing 12-Month Free Cash Flow Margin: 4.3%
Operating a network of more than 350 facilities with 3,300 delivery routes serving customers weekly, Vestis (NYSE: VSTS) provides uniform rentals, workplace supplies, and facility services to over 300,000 business locations across the United States and Canada.
Why Is VSTS Risky?
- Products and services are facing end-market challenges during this cycle, as seen in its flat sales over the last two years
- Demand will likely be soft over the next 12 months as Wall Street’s estimates imply tepid growth of 2.5%
- Earnings per share have dipped by 39.9% annually over the past two years, which is concerning because stock prices follow EPS over the long term
At $8.09 per share, Vestis trades at 11.4x forward price-to-earnings. If you’re considering VSTS for your portfolio, see our FREE research report to learn more.
One Stock to Buy:
Deckers (DECK)
Trailing 12-Month Free Cash Flow Margin: 20.4%
Established in 1973, Deckers (NYSE: DECK) is a footwear and apparel conglomerate with a portfolio of lifestyle and performance brands.
Why Do We Love DECK?
- Solid 18% annual revenue growth over the last five years underscores its brand’s appeal to consumers
- Free cash flow margin is expected to increase by 2.8 percentage points next year, suggesting the company will have more capital to invest or return to shareholders
- Improving returns on capital reflect management’s ability to monetize investments
Deckers is trading at $110.70 per share, or 16.8x forward price-to-earnings. Is now a good time to buy? Find out in our full research report, it’s free.
Stocks We Like Even More
Market indices reached historic highs following Donald Trump’s presidential victory in November 2024, but the outlook for 2025 is clouded by new trade policies that could impact business confidence and growth.
While this has caused many investors to adopt a "fearful" wait-and-see approach, we’re leaning into our best ideas that can grow regardless of the political or macroeconomic climate. Take advantage of Mr. Market by checking out our Top 9 Market-Beating Stocks. This is a curated list of our High Quality stocks that have generated a market-beating return of 175% over the last five years.
Stocks that made our list in 2019 include now familiar names such as Nvidia (+2,183% between December 2019 and December 2024) as well as under-the-radar businesses like Axon (+711% five-year return). Find your next big winner with StockStory today for free.
