While strong cash flow is a key indicator of stability, it doesn’t always translate to superior returns. Some cash-heavy businesses struggle with inefficient spending, slowing demand, or weak competitive positioning.

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 that may struggle to keep up.

Two Stocks to Sell:

Royal Caribbean (RCL)

Trailing 12-Month Free Cash Flow Margin: 6.9%

Established in 1968, Royal Caribbean Cruises (NYSE: RCL) is a global cruise vacation company renowned for its innovative and exciting cruise experiences.

Why Is RCL Risky?

1. Performance surrounding its passenger cruise days has lagged its peers
2. Lacking free cash flow generation means it has few chances to reinvest for growth, repurchase shares, or distribute capital
3. Low returns on capital reflect management’s struggle to allocate funds effectively

Royal Caribbean is trading at $272.81 per share, or 14.7x forward P/E. To fully understand why you should be careful with RCL, check out our full research report (it’s free).

10x Genomics (TXG)

Trailing 12-Month Free Cash Flow Margin: 20.2%

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 Do We Think TXG Will Underperform?

1. Muted 1.9% annual revenue growth over the last two years shows its demand lagged behind its healthcare peers
2. Revenue base of $642.8 million puts it at a disadvantage compared to larger competitors exhibiting economies of scale
3. Negative returns on capital show that some of its growth strategies have backfired

10x Genomics’s stock price of $18.56 implies a valuation ratio of 3.9x forward price-to-sales. If you’re considering TXG for your portfolio, see our FREE research report to learn more.

One Stock to Watch:

Burlington (BURL)

Trailing 12-Month Free Cash Flow Margin: 1.5%

Founded in 1972 as a discount coat and outerwear retailer, Burlington Stores (NYSE: BURL) is now an off-price retailer that has broadened into general apparel, footwear, and home goods.

Why Are We Fans of BURL?

1. Fast expansion of new stores to reach markets with few or no locations is justified by its same-store sales growth
2. Brick-and-mortar locations are witnessing elevated demand as their same-store sales growth averaged 3% over the past two years
3. Market share will likely rise over the next 12 months as its expected revenue growth of 9.6% is robust

At $296.65 per share, Burlington trades at 25.7x forward P/E. Is now a good time to buy? See for yourself in our in-depth 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.

Find out which 5 stocks it's flagging for this month — FREE. Get Our Top 5 Growth Stocks for Free HERE.

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.