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.
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 reinvests wisely to drive long-term success and two that may face some trouble.
Two Stocks to Sell:
Ford (F)
Trailing 12-Month Free Cash Flow Margin: 6.7%
Established to make automobiles accessible to a broader segment of the population, Ford (NYSE: F) designs, manufactures, and sells a variety of automobiles, trucks, and electric vehicles.
Why Do We Steer Clear of F?
- Large revenue base makes it harder to increase sales quickly, and its annual revenue growth of 3.1% over the last two years was below our standards for the industrials sector
- Waning returns on capital imply its previous profit engines are losing steam
- 10× net-debt-to-EBITDA ratio makes lenders less willing to extend additional capital, potentially necessitating dilutive equity offerings
At $12.65 per share, Ford trades at 8.4x forward P/E. To fully understand why you should be careful with F, check out our full research report (it’s free).
Surgery Partners (SGRY)
Trailing 12-Month Free Cash Flow Margin: 5.9%
With more than 180 locations across 33 states serving as alternatives to traditional hospital settings, Surgery Partners (NASDAQ: SGRY) operates a national network of outpatient surgical facilities including ambulatory surgery centers and short-stay surgical hospitals.
Why Are We Hesitant About SGRY?
- Weak unit sales over the past two years show it’s struggled to increase its sales volumes and had to rely on price increases
- Estimated sales growth of 3% for the next 12 months implies demand will slow from its two-year trend
- High net-debt-to-EBITDA ratio of 7× increases the risk of forced asset sales or dilutive financing if operational performance weakens
Surgery Partners’s stock price of $14.73 implies a valuation ratio of 90.2x forward P/E. Dive into our free research report to see why there are better opportunities than SGRY.
One Stock to Watch:
EPAM (EPAM)
Trailing 12-Month Free Cash Flow Margin: 11.2%
Founded in 1993 during the early days of offshore software development, EPAM Systems (NYSE: EPAM) provides digital engineering, cloud, and AI transformation services to help global enterprises and startups modernize their technology systems and create digital products.
Why Are We Positive On EPAM?
- Market share has increased this cycle as its 15.5% annual revenue growth over the last five years was exceptional
- Earnings growth has easily exceeded the peer group average over the last five years as its EPS has compounded at 12.7% annually
- Market-beating returns on capital illustrate that management has a knack for investing in profitable ventures
EPAM is trading at $129.40 per share, or 10.3x forward P/E. Is now the right time to buy? See for yourself in our in-depth research report, it’s free.
Stocks We Like Even More
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Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,326% between June 2020 and June 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.
