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 reinvests wisely to drive long-term success and two that may struggle to keep up.
Two Stocks to Sell:
BILL (BILL)
Trailing 12-Month Free Cash Flow Margin: 20.4%
Transforming the messy back-office financial operations that plague small business owners, BILL (NYSE: BILL) provides a cloud-based platform that automates accounts payable, accounts receivable, and expense management for small and midsize businesses.
Why Are We Hesitant About BILL?
- Products, pricing, or go-to-market strategy may need some adjustments as its 12.4% average billings growth over the last year was weak
- Projected sales growth of 12.1% for the next 12 months suggests sluggish demand
- Operating profits increased over the last year as the company gained some leverage on its fixed costs and became more efficient
BILL’s stock price of $32.27 implies a valuation ratio of 2x forward price-to-sales. To fully understand why you should be careful with BILL, check out our full research report (it’s free).
Rush Enterprises (RUSHA)
Trailing 12-Month Free Cash Flow Margin: 5.7%
Headquartered in Texas, Rush Enterprises (NASDAQ: RUSH.A) provides truck-related services and solutions, including sales, leasing, parts, and maintenance for commercial vehicles.
Why Are We Wary of RUSHA?
- Sales tumbled by 4% annually over the last two years, showing market trends are working against it during this cycle
- Earnings per share have contracted by 8.5% annually over the last two years, a headwind for returns as stock prices often echo long-term EPS performance
- Eroding returns on capital suggest its historical profit centers are aging
At $70.58 per share, Rush Enterprises trades at 18.2x forward P/E. Check out our free in-depth research report to learn more about why RUSHA doesn’t pass our bar.
One Stock to Buy:
Microsoft (MSFT)
Trailing 12-Month Free Cash Flow Margin: 22.9%
Originally named "Micro-soft" for microcomputer software when founded in 1975, Microsoft (NASDAQ: MSFT) is a global technology company that develops software, cloud services, devices, and AI solutions for consumers, businesses, and organizations worldwide.
Why Is MSFT a Good Business?
- Microsoft is one of the great brands not just in tech but all of business. It produces mission-critical software and bundles it together, resulting in cream-of-the-crop gross margins.
- The company’s elite unit economics lead to robust profit margins that improve over time. This speaks to the scale advantages and operating efficiency across its diverse portfolio, which spans everything from Office and Azure to Minecraft.
- Microsoft has a virtuous cycle of returns. Its dominant market position enables it to generate strong free cash flow, and it reinvests these funds into promising ventures that further strengthen its competitive moat.
Microsoft is trading at $368.32 per share, or 20.5x forward price-to-earnings. Is now the right time to buy? Find out in our full research report, it’s free.
High-Quality Stocks for All Market Conditions
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 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.
