A company that generates cash isn’t automatically a winner. Some businesses stockpile cash but fail to reinvest wisely, limiting their ability to expand.
Not all companies are created equal, and StockStory is here to surface the ones with real upside. 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:
HNI (HNI)
Trailing 12-Month Free Cash Flow Margin: 6.6%
With roots dating back to 1944 and a significant acquisition of Kimball International in 2023, HNI (NYSE: HNI) manufactures and sells office furniture systems, seating, and storage solutions, as well as residential fireplaces and heating products.
Why Are We Hesitant About HNI?
- 4.9% annual revenue growth over the last five years was slower than its business services peers
- Estimated sales growth of 3.4% for the next 12 months implies demand will slow from its two-year trend
- Free cash flow margin dropped by 2.2 percentage points over the last five years, implying the company became more capital intensive as competition picked up
At $45.53 per share, HNI trades at 12.2x forward P/E. To fully understand why you should be careful with HNI, check out our full research report (it’s free).
Bread Financial (BFH)
Trailing 12-Month Free Cash Flow Margin: 48.1%
Formerly known as Alliance Data Systems until its 2022 rebranding, Bread Financial (NYSE: BFH) provides credit cards, installment loans, and savings products to consumers while powering branded payment solutions for retailers and merchants.
Why Are We Out on BFH?
- Products and services are facing significant end-market challenges during this cycle as sales have declined by 5.4% annually over the last two years
- Incremental sales over the last five years were much less profitable as its earnings per share fell by 6.8% annually while its revenue grew
Bread Financial’s stock price of $65.87 implies a valuation ratio of 8.6x forward P/E. Read our free research report to see why you should think twice about including BFH in your portfolio.
One Stock to Watch:
Intuitive Surgical (ISRG)
Trailing 12-Month Free Cash Flow Margin: 21.8%
Pioneering minimally invasive surgery since its first da Vinci system was FDA-cleared in 2000, Intuitive Surgical (NASDAQ: ISRG) develops and manufactures robotic-assisted surgical systems that enable minimally invasive procedures across various medical specialties.
Why Does ISRG Catch Our Eye?
- Average unit sales growth of 11.4% over the past two years reflects steady demand for its products
- Sales outlook for the upcoming 12 months implies the business will stay on its desirable two-year growth trajectory
- Earnings per share grew by 17.7% annually over the last five years and trumped its peers
Intuitive Surgical is trading at $442 per share, or 52.8x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free.
Stocks We Like Even More
Trump’s April 2025 tariff bombshell triggered a massive market selloff, but stocks have since staged an impressive recovery, leaving those who panic sold on the sidelines.
Take advantage of the rebound by checking out 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 183% over the last five years (as of March 31st 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-small-cap company Exlservice (+354% 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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