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 excels at turning cash into shareholder value and two best left off your watchlist.

Two Stocks to Sell:

Autodesk (ADSK)

Trailing 12-Month Free Cash Flow Margin: 30.7%

Starting with AutoCAD in the 1980s and evolving into a comprehensive design ecosystem, Autodesk (NASDAQ: ADSK) provides software solutions for architecture, engineering, construction, manufacturing, and entertainment industries to design, simulate, and visualize projects.

Why Does ADSK Give Us Pause?

1. Revenue increased by 13.5% annually over the last five years, acceptable on an absolute basis but tepid for a software company enjoying secular tailwinds
2. Long payback periods on sales and marketing expenses limit customer growth and signal the company operates in a highly competitive environment
3. Operating margin didn’t move over the last year, showing it couldn’t increase its efficiency

Autodesk is trading at $300.36 per share, or 8.3x forward price-to-sales. Dive into our free research report to see why there are better opportunities than ADSK.

Charles River Laboratories (CRL)

Trailing 12-Month Free Cash Flow Margin: 13.5%

Named after the Massachusetts river where it was founded in 1947, Charles River Laboratories (NYSE: CRL) provides non-clinical drug development services, research models, and manufacturing support to pharmaceutical and biotechnology companies.

Why Does CRL Worry Us?

1. 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
2. Sales are projected to be flat over the next 12 months and imply weak demand
3. Waning returns on capital from an already weak starting point displays the inefficacy of management’s past and current investment decisions

At $203.01 per share, Charles River Laboratories trades at 18.7x forward P/E. Read our free research report to see why you should think twice about including CRL in your portfolio.

One Stock to Watch:

Cadence Design Systems (CDNS)

Trailing 12-Month Free Cash Flow Margin: 28.4%

Powering the chips behind everything from smartphones to AI accelerators for over 35 years, Cadence Design Systems (NASDAQ: CDNS) provides essential computational software, hardware, and intellectual property used by engineers to design and verify advanced electronic systems and semiconductors.

Why Could CDNS Be a Winner?

1. Billings growth has averaged 21.8% over the last year, indicating a healthy pipeline of new contracts that should drive future revenue increases
2. Software is difficult to replicate at scale and leads to a best-in-class gross margin of 86.6%
3. Fast payback periods on sales and marketing expenses allow the company to invest heavily and onboard many customers concurrently

Cadence Design Systems’s stock price of $317.50 implies a valuation ratio of 15x forward price-to-sales. Is now a good time to buy? Find out in our full research report, it’s free for active Edge members.

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 6 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 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.