A company that generates cash isn’t automatically a winner. Some businesses stockpile cash but fail to reinvest wisely, limiting their ability to expand.
Luckily for you, we built StockStory to help you separate the good from the bad. That said, here is one cash-producing company that excels at turning cash into shareholder value and two that may face some trouble.
Two Stocks to Sell:
Paycom (PAYC)
Trailing 12-Month Free Cash Flow Margin: 21.3%
Pioneering the concept of employees doing their own payroll with its "Beti" technology, Paycom (NYSE: PAYC) provides cloud-based human capital management software that helps businesses manage the entire employment lifecycle from recruitment to retirement.
Why Does PAYC Fall Short?
- Average billings growth of 9% over the last year was subpar, suggesting it struggled to push its software and might have to lower prices to stimulate demand
- Estimated sales growth of 6.6% for the next 12 months implies demand will slow from its two-year trend
- Operating margin failed to increase over the last year, indicating the company couldn’t optimize its expenses
At $128.64 per share, Paycom trades at 2.9x forward price-to-sales. Read our free research report to see why you should think twice about including PAYC in your portfolio.
Oceaneering (OII)
Trailing 12-Month Free Cash Flow Margin: 8.5%
Deploying a fleet of 250 tethered underwater robots around the globe, Oceaneering International (NYSE: OII) provides remotely operated underwater vehicles and subsea equipment for offshore energy exploration.
Why Do We Think OII Will Underperform?
- Sales stagnated over the last ten years and signal the need for new growth strategies
- High extraction costs and unfavorable asset economics are reflected in its low gross margin of 17.4%
- Lacking free cash flow generation means it has few chances to reinvest for growth, repurchase shares, or distribute capital
Oceaneering’s stock price of $40.26 implies a valuation ratio of 9.2x forward EV-to-EBITDA. If you’re considering OII for your portfolio, see our FREE research report to learn more.
One Stock to Watch:
Incyte (INCY)
Trailing 12-Month Free Cash Flow Margin: 27.6%
Founded in 1991 and evolving from a genomics research firm to a commercial-stage drug developer, Incyte (NASDAQ: INCY) is a biopharmaceutical company that discovers, develops, and commercializes proprietary therapeutics for cancer and inflammatory diseases.
Why Does INCY Stand Out?
- Annual revenue growth of 19.3% over the past two years was outstanding, reflecting market share gains this cycle
- Share buybacks catapulted its annual earnings per share growth to 19.4%, which outperformed its revenue gains over the last five years
- Free cash flow margin increased by 7.9 percentage points over the last five years, giving the company more capital to invest or return to shareholders
Incyte is trading at $112.75 per share, or 13.5x forward P/E. Is now the time to initiate a position? Find out in our full research report, it’s free.
Stocks We Like Even More
ALSO WORTH WATCHING: Top 5 Momentum Stocks. The best time to own a great stock is when the market is finally noticing it. These aren’t just high-quality businesses. Something is happening with them right now. Elite fundamentals meet near-term momentum — both boxes checked at the same time.
Find out which stocks our AI platform is flagging this week. See this week’s Strong Momentum stocks — FREE. Get Our Strong Momentum Stocks for Free HERE.
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-small-cap company Exlservice (+354% five-year return). Find your next big winner with StockStory today.
