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. Keeping that in mind, 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:

Darden (DRI)

Trailing 12-Month Free Cash Flow Margin: 8.9%

Founded in 1968 as Red Lobster, Darden (NYSE: DRI) is a leading American restaurant company that owns and operates a portfolio of popular restaurant brands.

Why Does DRI Give Us Pause?

1. Scale is a double-edged sword because it limits the company’s growth potential compared to its smaller competitors, as reflected in its below-average annual revenue increases of 6.3% for the last six years
2. Poor same-store sales performance over the past two years indicates it’s having trouble bringing new diners into its restaurants
3. Gross margin of 21.6% reflects the bad unit economics inherent in most restaurant businesses

At $173.85 per share, Darden trades at 16.2x forward P/E. Read our free research report to see why you should think twice about including DRI in your portfolio.

Bristol-Myers Squibb (BMY)

Trailing 12-Month Free Cash Flow Margin: 31.9%

With roots dating back to 1887 and a transformative merger in 1989 that gave the company its current name, Bristol-Myers Squibb (NYSE: BMY) discovers, develops, and markets prescription medications for serious diseases including cancer, blood disorders, immunological conditions, and cardiovascular diseases.

Why Do We Think Twice About BMY?

1. Large revenue base makes it harder to increase sales quickly, and its annual revenue growth of 3.4% over the last two years was below our standards for the healthcare sector
2. Sales are projected to tank by 5.2% over the next 12 months as demand evaporates
3. Eroding returns on capital from an already low base indicate that management’s recent investments are destroying value

Bristol-Myers Squibb’s stock price of $46.65 implies a valuation ratio of 7.7x forward P/E. Dive into our free research report to see why there are better opportunities than BMY.

One Stock to Watch:

Apple (AAPL)

Trailing 12-Month Free Cash Flow Margin: 23.7%

Creator of the iPhone and App Store, Apple (NASDAQ: AAPL) is a legendary developer of consumer electronics and software.

Why Should AAPL Be on Your Watchlist?

1. Apple's revenue base is so large because nearly everyone in the U.S. has an iPhone, but this is a double-edged sword. Growth must now come from upgrades, a harder pitch that has resulted in sluggish top-line performance recently.
2. Still, Apple's devices have endured for decades, speaking to its brand, design ethos, and technological chops. Its success is rare in the world of consumer electronics, which is fraught because of commoditization, competition, and obsolescence risk.
3. The company may not have the best gross margin because of its hardware orientation, but it still manages to produce elite operating and free cash flow margins. This shows it doesn’t need over-the-top marketing campaigns to convince people to buy its products.

Apple is trading at $272.75 per share, or 33.3x forward price-to-earnings. 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

If your portfolio success hinges on just 4 stocks, your wealth is built on fragile ground. You have a small window to secure high-quality assets before the market widens and these prices disappear.

Don’t wait for the next volatility shock. Check 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 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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