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.

Not all companies are created equal, and StockStory is here to surface the ones with real upside. That said, here is one cash-producing company that excels at turning cash into shareholder value and two that may struggle to keep up.

Two Stocks to Sell:

Semtech (SMTC)

Trailing 12-Month Free Cash Flow Margin: 12.8%

A public company since the late 1960s, Semtech (NASDAQ: SMTC) is a provider of analog and mixed-signal semiconductors used for Internet of Things systems and cloud connectivity.

Why Do We Think SMTC Will Underperform?

1. Mounting operating losses demonstrate the tradeoff between growth and profitability
2. Weak free cash flow margin of 6.5% has deteriorated further over the last five years as its investments increased
3. Push for growth has led to negative returns on capital, signaling value destruction, and its falling returns suggest its earlier profit pools are drying up

Semtech is trading at $59.52 per share, or 32.9x forward P/E. Dive into our free research report to see why there are better opportunities than SMTC.

Marriott (MAR)

Trailing 12-Month Free Cash Flow Margin: 6.5%

Founded by J. Willard Marriott in 1927, Marriott International (NASDAQ: MAR) is a global hospitality company with a portfolio of over 7,000 properties and 30 brands, spanning 130+ countries and territories.

Why Does MAR Worry Us?

1. Weak revenue per room over the past two years indicates challenges in maintaining pricing power and occupancy rates
2. Demand will likely be soft over the next 12 months as Wall Street’s estimates imply tepid growth of 4.4%
3. Low free cash flow margin of 8.7% for the last two years gives it little breathing room, constraining its ability to self-fund growth or return capital to shareholders

At $268.94 per share, Marriott trades at 25.5x forward P/E. To fully understand why you should be careful with MAR, check out our full research report (it’s free).

One Stock to Watch:

Primoris (PRIM)

Trailing 12-Month Free Cash Flow Margin: 7.2%

Listed on the NASDAQ in 2008, Primoris (NYSE: PRIM) builds, maintains, and upgrades infrastructure in the utility, energy, and civil construction industries.

Why Are We Positive On PRIM?

1. Annual revenue growth of 15.9% over the past five years was outstanding, reflecting market share gains this cycle
2. Sales pipeline is in good shape as its backlog averaged 159% growth over the past two years
3. Earnings per share grew by 28.6% annually over the last two years and trumped its peers

Primoris’s stock price of $117.65 implies a valuation ratio of 25.5x forward P/E. Is now the right time to buy? See for yourself in our full research report, it’s free.

Stocks We Like Even More

Trump’s April 2025 tariff bombshell triggered a massive market selloff, but stocks have since staged an impressive recovery, leaving those who panic sold on the sidelines.

Take advantage of the rebound 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 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-small-cap company Comfort Systems (+782% 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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