Generating cash is essential for any business, but not all cash-rich companies are great investments. Some produce plenty of cash but fail to allocate it effectively, leading to missed opportunities.
Cash flow is valuable, but it’s not everything - StockStory helps you identify the companies that truly put it to work. Keeping that in mind, here is one cash-producing company that excels at turning cash into shareholder value and two best left off your watchlist.
Two Stocks to Sell:
Shutterstock (SSTK)
Trailing 12-Month Free Cash Flow Margin: 12.2%
Originally featuring a library that included many of founder Jon Oringer’s photos, Shutterstock (NYSE: SSTK) is now a digital platform where customers can license and use hundreds of millions of pieces of content.
Why Do We Think Twice About SSTK?
- Decision to emphasize platform growth over monetization has contributed to 87.9% annual declines in its average revenue per request
- Projected sales decline of 18.8% for the next 12 months points to a tough demand environment ahead
- Performance over the past three years shows its incremental sales were much less profitable, as its earnings per share fell by 31.2% annually
At $5.74 per share, Shutterstock trades at 0.6x forward price-to-gross profit. To fully understand why you should be careful with SSTK, check out our full research report (it’s free).
Strategic Education (STRA)
Trailing 12-Month Free Cash Flow Margin: 13.7%
Formed through the merger of Strayer Education and Capella Education in 2018, Strategic Education (NASDAQ: STRA) is a career-focused higher education provider.
Why Are We Bearish on STRA?
- Number of international students has disappointed over the past two years, indicating weak demand for its offerings
- Earnings per share were flat over the last five years while its revenue grew, showing its incremental sales were less profitable
- Capital intensity will likely increase as its free cash flow margin is anticipated to drop by 2 percentage points over the next year
Strategic Education is trading at $75.01 per share, or 9.9x forward P/E. If you’re considering STRA for your portfolio, see our FREE research report to learn more.
One Stock to Buy:
Chord Energy (CHRD)
Trailing 12-Month Free Cash Flow Margin: 9.4%
Holding the largest acreage position in the Williston Basin, Chord Energy (NASDAQ: CHRD) drills for and produces crude oil, natural gas liquids, and natural gas in North Dakota's Williston Basin.
Why Do We Love CHRD?
- Impressive 21.8% annual revenue growth over the last ten years indicates it’s winning market share this cycle
- Revenue base of $5.33 billion gives it economies of scale and some negotiating power with suppliers
- Strong free cash flow margin of 22.3% enables it to reinvest or return capital consistently
Chord Energy’s stock price of $140.33 implies a valuation ratio of 7.4x forward P/E. Is now a good time to buy? See for yourself in our in-depth research report, it’s free.
High-Quality Stocks for All Market Conditions
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.
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Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Tecnoglass (+1,552% between June 2020 and June 2025). Find your next big winner with StockStory today.
