A company that generates cash isn’t automatically a winner. Some businesses stockpile cash but fail to reinvest wisely, limiting their ability to expand.
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 best left off your watchlist.
Two Stocks to Sell:
Target (TGT)
Trailing 12-Month Free Cash Flow Margin: 2.9%
With a higher focus on style and aesthetics compared to other large general merchandise retailers, Target (NYSE:TGT) serves the suburban consumer who is looking for a wide range of products under one roof.
Why Should You Dump TGT?
- Disappointing same-store sales over the past two years show customers aren’t responding well to its product selection and store experience
- Widely-available products (and therefore stiff competition) result in an inferior gross margin of 28% that must be offset through higher volumes
- Operating margin of 5.2% falls short of the industry average, and the smaller profit dollars make it harder to react to unexpected market developments
At $94.61 per share, Target trades at 12.2x forward P/E. Check out our free in-depth research report to learn more about why TGT doesn’t pass our bar.
Privia Health (PRVA)
Trailing 12-Month Free Cash Flow Margin: 5.4%
Operating in 13 states and the District of Columbia with over 4,300 providers serving more than 4.8 million patients, Privia Health (NASDAQ:PRVA) is a technology-driven company that helps physicians optimize their practices, improve patient experiences, and transition to value-based care models.
Why Are We Cautious About PRVA?
- Smaller revenue base of $2.04 billion means it hasn’t achieved the economies of scale that some industry juggernauts enjoy
- Low free cash flow margin of 4.3% for the last five years gives it little breathing room, constraining its ability to self-fund growth or return capital to shareholders
- Negative returns on capital show that some of its growth strategies have backfired
Privia Health’s stock price of $24.25 implies a valuation ratio of 25.2x forward P/E. Dive into our free research report to see why there are better opportunities than PRVA.
One Stock to Buy:
American Superconductor (AMSC)
Trailing 12-Month Free Cash Flow Margin: 7.1%
Founded in 1987, American Superconductor (NASDAQ:AMSC) has shifted from superconductor research to developing power systems, adapting to changing energy grid needs and naval technology requirements.
Why Are We Backing AMSC?
- Impressive 49% annual revenue growth over the last two years indicates it’s winning market share this cycle
- Free cash flow turned positive over the last five years, showing the company has crossed a key inflection point
- Historical investments are beginning to pay off as its returns on capital are growing
American Superconductor is trading at $33.37 per share, or 45.5x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free for active Edge members.
Stocks We Like Even More
Your portfolio can’t afford to be based on yesterday’s story. The risk in a handful of heavily crowded stocks is rising daily.
The names generating the next wave of massive growth are right here in our Top 5 Growth Stocks for this month. 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 Kadant (+351% five-year return). Find your next big winner with StockStory today for free. Find your next big winner with StockStory today. Find your next big winner with StockStory today
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