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 excels at turning cash into shareholder value and two that may face some trouble.
Two Stocks to Sell:
Etsy (ETSY)
Trailing 12-Month Free Cash Flow Margin: 23.5%
Founded by a struggling amateur furniture maker Robert Kalin and his two friends, Etsy (NYSE: ETSY) is one of the world’s largest online marketplaces, focusing on handmade or vintage items.
Why Are We Wary of ETSY?
- Intense competition is diverting traffic from its platform as its active buyers fell by 1.7% annually
- Projected sales decline of 2.3% for the next 12 months points to a tough demand environment ahead
- Incremental sales over the last three years were less profitable as its earnings per share were flat while its revenue grew
Etsy is trading at $64.53 per share, or 11.6x forward EV/EBITDA. To fully understand why you should be careful with ETSY, check out our full research report (it’s free).
10x Genomics (TXG)
Trailing 12-Month Free Cash Flow Margin: 19.1%
Founded in 2012 by scientists seeking to overcome limitations in traditional biological research methods, 10x Genomics (NASDAQ: TXG) develops instruments, consumables, and software that enable researchers to analyze biological systems at single-cell resolution and spatial context.
Why Are We Out on TXG?
- Muted 1.1% annual revenue growth over the last two years shows its demand lagged behind its healthcare peers
- Subscale operations are evident in its revenue base of $638.8 million, meaning it has fewer distribution channels than its larger rivals
- Negative returns on capital show that some of its growth strategies have backfired
At $21.65 per share, 10x Genomics trades at 4.6x forward price-to-sales. Dive into our free research report to see why there are better opportunities than TXG.
One Stock to Watch:
Interface (TILE)
Trailing 12-Month Free Cash Flow Margin: 8.5%
Pioneering carbon-neutral flooring since its founding in 1973, Interface (NASDAQ: TILE) is a global manufacturer of modular carpet tiles, luxury vinyl tile (LVT), and rubber flooring that specializes in carbon-neutral and sustainable flooring solutions.
Why Are We Positive On TILE?
- Performance over the past two years shows its incremental sales were extremely profitable, as its annual earnings per share growth of 33.7% outpaced its revenue gains
- Free cash flow margin jumped by 7.2 percentage points over the last five years, giving the company more resources to pursue growth initiatives, repurchase shares, or pay dividends
- Returns on capital are climbing as management makes more lucrative bets
Interface’s stock price of $29.64 implies a valuation ratio of 1.1x trailing 12-month price-to-sales. Is now a good time to buy? Find out in our full research report, it’s free.
Stocks We Like Even More
ONE MORE THING: Top 5 Growth Stocks. The biggest stock winners almost always had one thing in common before they ran. Revenue growing like crazy. Meta. CrowdStrike. Broadcom. Our AI flagged all three. They returned 315%, 314%, and 455%, respectively.
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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.
