A company that generates cash isn’t automatically a winner. Some businesses stockpile cash but fail to reinvest wisely, limiting their ability to expand.
Cash flow is valuable, but it’s not everything - StockStory helps you identify the companies that truly put it to work. That said, 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:
Manhattan Associates (MANH)
Trailing 12-Month Free Cash Flow Margin: 34.6%
Built on a "versionless" cloud architecture that delivers quarterly updates to all customers, Manhattan Associates (NASDAQ:MANH) develops cloud-based software that helps retailers, wholesalers, and manufacturers manage their supply chains, inventory, and omnichannel operations.
Why Are We Hesitant About MANH?
- Products, pricing, or go-to-market strategy may need some adjustments as its 4.1% average billings growth over the last year was weak
- Gross margin of 56.3% reflects its high servicing costs
- Operating margin failed to increase over the last year, indicating the company couldn’t optimize its expenses
At $137.32 per share, Manhattan Associates trades at 7.6x forward price-to-sales. If you’re considering MANH for your portfolio, see our FREE research report to learn more.
Keysight (KEYS)
Trailing 12-Month Free Cash Flow Margin: 23.8%
Spun off from Hewlett-Packard in 2014, Keysight (NYSE:KEYS) offers electronic measurement products for use in various sectors.
Why Are We Wary of KEYS?
- New orders were hard to come by as its average backlog growth of 1.1% over the past two years underwhelmed
- Performance over the past two years shows each sale was less profitable, as its earnings per share fell by 7.3% annually
- Shrinking returns on capital suggest that increasing competition is eating into the company’s profitability
Keysight’s stock price of $230.03 implies a valuation ratio of 29.4x forward P/E. Check out our free in-depth research report to learn more about why KEYS doesn’t pass our bar.
One Stock to Buy:
Monster (MNST)
Trailing 12-Month Free Cash Flow Margin: 24.9%
Founded in 2002 as a natural soda and juice company, Monster Beverage (NASDAQ:MNST) is a pioneer of the energy drink category, and its Monster Energy brand targets a young, active demographic.
Why Should You Buy MNST?
- Healthy operating margin of 28% shows it’s a well-run company with efficient processes, and its rise over the last year was fueled by some leverage on its fixed costs
- MNST is a free cash flow machine with the flexibility to invest in growth initiatives or return capital to shareholders, and its improved cash conversion implies it’s becoming a less capital-intensive business
- ROIC punches in at 37.3%, illustrating management’s expertise in identifying profitable investments
Monster is trading at $81.18 per share, or 36.7x forward P/E. Is now the time to initiate a position? See for yourself in our comprehensive research report, it’s free.
Stocks We Like Even More
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.