While strong cash flow is a key indicator of stability, it doesn’t always translate to superior returns. Some cash-heavy businesses struggle with inefficient spending, slowing demand, or weak competitive positioning.

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 struggle to keep up.

Two Stocks to Sell:

Flex (FLEX)

Trailing 12-Month Free Cash Flow Margin: 4.2%

Originally known as Flextronics until its 2016 rebranding, Flex (NASDAQ: FLEX) is a global manufacturing partner that designs, engineers, and builds products for companies across industries from medical devices to solar trackers.

Why Are We Wary of FLEX?

1. Customers postponed purchases of its products and services this cycle as its revenue declined by 4.2% annually over the last two years
2. Estimated sales growth of 3% for the next 12 months is soft and implies weaker demand
3. Ability to fund investments or reward shareholders with increased buybacks or dividends is restricted by its weak free cash flow margin of 2.7% for the last five years

Flex’s stock price of $59.46 implies a valuation ratio of 19.6x forward P/E. Check out our free in-depth research report to learn more about why FLEX doesn’t pass our bar.

PROG (PRG)

Trailing 12-Month Free Cash Flow Margin: 8.7%

Evolving from its origins as Aaron's, Inc. before rebranding in 2020, PROG Holdings (NYSE: PRG) provides alternative payment solutions including lease-to-own options and second-look credit products for consumers who may not qualify for traditional financing.

Why Is PRG Risky?

1. Sales stagnated over the last two years and signal the need for new growth strategies
2. Performance over the past five years shows its incremental sales were much less profitable, as its earnings per share fell by 3.1% annually
3. Loan losses and capital returns have eroded its tangible book value per share this cycle as its tangible book value per share declined by 13.2% annually over the last five years

At $30.39 per share, PROG trades at 9.1x forward P/E. If you’re considering PRG for your portfolio, see our FREE research report to learn more.

One Stock to Watch:

Limbach (LMB)

Trailing 12-Month Free Cash Flow Margin: 4.3%

Established in 1901, Limbach (NASDAQ: LMB) provides integrated building systems solutions, including mechanical, electrical, and plumbing services.

Why Do We Like LMB?

1. Operating margin increased by 6.2 percentage points over the last five years as it refined its cost structure
2. Incremental sales over the last two years have been highly profitable as its earnings per share increased by 45.1% annually, topping its revenue gains
3. Free cash flow margin grew by 5.9 percentage points over the last five years, giving the company more chips to play with

Limbach is trading at $94.43 per share, or 22x forward P/E. Is now the right time to buy? See for yourself in our full 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 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).

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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