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.
Luckily for you, we built StockStory to help you separate the good from the bad. That said, here is one cash-producing company that reinvests wisely to drive long-term success and two that may struggle to keep up.
Two Stocks to Sell:
Vestis (VSTS)
Trailing 12-Month Free Cash Flow Margin: 3.6%
Operating a network of more than 350 facilities with 3,300 delivery routes serving customers weekly, Vestis (NYSE: VSTS) provides uniform rentals, workplace supplies, and facility services to over 300,000 business locations across the United States and Canada.
Why Is VSTS Risky?
- Annual sales declines of 2.8% for the past two years show its products and services struggled to connect with the market during this cycle
- Sales are projected to be flat over the next 12 months and imply weak demand
- Falling earnings per share over the last four years has some investors worried as stock prices ultimately follow EPS over the long term
Vestis is trading at $12.80 per share, or 24.9x forward P/E. To fully understand why you should be careful with VSTS, check out our full research report (it’s free).
United Therapeutics (UTHR)
Founded by a mother seeking treatment for her daughter's pulmonary arterial hypertension, United Therapeutics (NASDAQ: UTHR) develops and commercializes medications for chronic lung diseases and other life-threatening conditions, with a focus on pulmonary hypertension treatments.
Why Do We Think Twice About UTHR?
- Products and services are facing significant end-market challenges during this cycle as sales have declined by 11.9% annually over the last five years
- Smaller revenue base of $800.5 million means it hasn’t achieved the economies of scale that some industry juggernauts enjoy
United Therapeutics’s stock price of $536.68 implies a valuation ratio of 11.8x forward price-to-sales. Read our free research report to see why you should think twice about including UTHR in your portfolio.
One Stock to Watch:
CNX Resources (CNX)
Trailing 12-Month Free Cash Flow Margin: 29.2%
Tracing back to operations that began in 1860, CNX Resources (NYSE: CNX) drills for and produces natural gas from underground shale formations in Pennsylvania, Ohio, and West Virginia.
Why Are We Positive on CNX?
- Attractive asset base leads to wonderful unit economics and a stellar gross margin of 68%
- EBITDA margin expanded by 1.9 percentage points over the last five years as it scaled and became more efficient
- Strong free cash flow margin of 23.4% enables it to reinvest or return capital consistently
At $33.30 per share, CNX Resources trades at 12x forward P/E. Is now the right time to buy? See for yourself in our comprehensive research report, it’s free.
Stocks We Like Even More
WHILE YOU’RE HERE: Top 9 Market-Beating Stocks. The best stocks don’t just beat the market once. They do it again. And again. Robust revenue growth, rising free cash flow, returns on capital that leave their competition in the dust. The market has already rewarded these businesses.
But our AI platform says the party isn’t over. Find out which 9 stocks made the cut this week — FREE. Get Our Top 9 Market-Beating 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-micro-cap company Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today.
