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.
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 leverages its financial strength to beat its competitors and two that may face some trouble.
Two Stocks to Sell:
Nordson (NDSN)
Trailing 12-Month Free Cash Flow Margin: 23.7%
Founded in 1954, Nordson Corporation (NASDAQ:NDSN) manufactures dispensing equipment and industrial adhesives, sealants and coatings.
Why Are We Wary of NDSN?
- Organic sales performance over the past two years indicates the company may need to make strategic adjustments or rely on M&A to catalyze faster growth
- Earnings growth underperformed the sector average over the last two years as its EPS grew by just 2% annually
- Diminishing returns on capital suggest its earlier profit pools are drying up
Nordson’s stock price of $294.57 implies a valuation ratio of 26.2x forward P/E. Read our free research report to see why you should think twice about including NDSN in your portfolio.
Affirm (AFRM)
Trailing 12-Month Free Cash Flow Margin: 16.7%
Founded by PayPal co-founder Max Levchin with a mission to create honest financial products, Affirm (NASDAQ:AFRM) provides a payment network that allows consumers to make purchases and pay for them over time with transparent, flexible installment loans.
Why Does AFRM Worry Us?
- Negative return on equity shows management lost money while trying to expand the business
- 7× net-debt-to-EBITDA ratio makes lenders less willing to extend additional capital, potentially necessitating dilutive equity offerings
At $56.54 per share, Affirm trades at 17.1x forward P/E. To fully understand why you should be careful with AFRM, check out our full research report (it’s free).
One Stock to Buy:
AMD (AMD)
Trailing 12-Month Free Cash Flow Margin: 16.8%
Founded in 1969 by a group of former Fairchild semiconductor executives led by Jerry Sanders, Advanced Micro Devices (NASDAQ:AMD) is one of the leading designers of computer processors and graphics chips used in PCs and data centers.
Why Are We Bullish on AMD?
- Market share has increased this cycle as its 28.8% annual revenue growth over the last five years was exceptional
- Demand for the next 12 months is expected to accelerate above its two-year trend as Wall Street forecasts robust revenue growth of 34.5%
- Earnings growth has easily exceeded the peer group average over the last five years as its EPS has compounded at 26.4% annually
AMD is trading at $213.14 per share, or 32x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free.
High-Quality Stocks for All Market Conditions
The market’s up big this year - but there’s a catch. Just 4 stocks account for half the S&P 500’s entire gain. That kind of concentration makes investors nervous, and for good reason. While everyone piles into the same crowded names, smart investors are hunting quality where no one’s looking - and paying a fraction of the price. Check out the high-quality names we’ve flagged in our Top 5 Strong Momentum Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 244% over the last five years (as of June 30, 2025).
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.