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. That said, here is one cash-producing company that reinvests wisely to drive long-term success and two best left off your watchlist.
Two Stocks to Sell:
Norfolk Southern (NSC)
Trailing 12-Month Free Cash Flow Margin: 18.1%
Starting with a single route from Virginia to North Carolina, Norfolk Southern (NYSE:NSC) is a freight transportation company operating a major railroad network across the eastern United States.
Why Is NSC Risky?
- Disappointing unit sales over the past two years indicate demand is soft and that the company may need to revise its strategy
- Day-to-day expenses have swelled relative to revenue over the last five years as its operating margin fell by 4.1 percentage points
- Free cash flow margin dropped by 8.4 percentage points over the last five years, implying the company became more capital intensive as competition picked up
At $292.36 per share, Norfolk Southern trades at 24.1x forward P/E. Check out our free in-depth research report to learn more about why NSC doesn’t pass our bar.
Biogen (BIIB)
Trailing 12-Month Free Cash Flow Margin: 22.9%
Founded in 1978 and pioneering treatments for some of medicine's most complex challenges, Biogen (NASDAQ:BIIB) develops and markets therapies for neurological conditions, including multiple sclerosis, Alzheimer's disease, spinal muscular atrophy, and rare diseases.
Why Is BIIB Not Exciting?
- Customers postponed purchases of its products and services this cycle as its revenue declined by 6.7% annually over the last five years
- Sales are projected to tank by 8.8% over the next 12 months as demand evaporates further
- Earnings per share have dipped by 12.7% annually over the past five years, which is concerning because stock prices follow EPS over the long term
Biogen is trading at $179.06 per share, or 14.1x forward P/E. Dive into our free research report to see why there are better opportunities than BIIB.
One Stock to Watch:
Ulta (ULTA)
Trailing 12-Month Free Cash Flow Margin: 8.7%
Offering high-end prestige brands as well as lower-priced, mass-market ones, Ulta Beauty (NASDAQ:ULTA) is an American retailer that sells makeup, skincare, haircare, and fragrance products.
Why Could ULTA Be a Winner?
- Same-store sales growth lends it the confidence to gradually expand its store base so it can reach more customers
- Brick-and-mortar locations are witnessing elevated demand as their same-store sales growth averaged 2.6% over the past two years
- Market-beating returns on capital illustrate that management has a knack for investing in profitable ventures
Ulta’s stock price of $666.11 implies a valuation ratio of 23.6x forward P/E. Is now the time to initiate a position? 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-small-cap company Comfort Systems (+782% five-year return). Find your next big winner with StockStory today.