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.
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 best left off your watchlist.
Two stocks to sell:
Service International (SCI)
Trailing 12-month free cash flow margin: 15.4%
Founded in 1962, Service International (NYSE: SCI) is a leading provider of death care products and services in North America.
Why Are We Bearish on SCI?
- Number of funeral services performed has disappointed over the past two years, indicating weak demand for its offerings
- Poor free cash flow margin of 14.9% for the last two years limits its freedom to invest in growth initiatives, execute share buybacks, or pay dividends
- Stagnant returns on capital show management has failed to improve the company’s business quality
Service International’s stock price of $76.94 implies a valuation ratio of 17.7x forward P/E. Dive into our free research report to see why there are better opportunities than SCI.
Deere (DE)
Trailing 12-month free cash flow margin: 12.8%
Revolutionizing agriculture with the first self-polishing cast-steel plow in the 1800s, Deere (NYSE: DE) manufactures and distributes advanced agricultural, construction, forestry, and turf care equipment.
Why Are We Out on DE?
- Annual sales declines of 7.4% for the past two years show its products and services struggled to connect with the market during this cycle
- Earnings per share have dipped by 21.7% annually over the past two years, which is concerning because stock prices follow EPS over the long term
- Diminishing returns on capital suggest its earlier profit pools are drying up
Deere is trading at $677.00 per share, or 31.7x forward P/E. Read our free research report to see why you should think twice about including DE in your portfolio.
One stock to watch:
Chipotle (CMG)
Trailing 12-month free cash flow margin: 11.9%
Born from a desire to offer quick meals with fresh, flavorful ingredients, Chipotle (NYSE: CMG) is a fast-food chain known for its healthy, Mexican-inspired cuisine and customizable dishes.
Why Is CMG Interesting?
- Bold push to open new restaurants demonstrates an ambitious strategy to establish itself in underpenetrated territories
- Unparalleled revenue scale of $12.71 billion gives it advantageous pricing and terms with suppliers
- ROIC punches in at 19.9%, illustrating management’s expertise in identifying profitable investments, and its returns are climbing as it finds even more attractive growth opportunities
At $34.82 per share, Chipotle trades at 26.1x forward P/E. Is now the right time to buy? See for yourself in our comprehensive research report, it’s free.
Stocks we like even more
ALSO WORTH WATCHING: Top 5 Momentum Stocks. The best time to own a great stock is when the market is finally noticing it. These aren’t just high-quality businesses. Something is happening with them right now. Elite fundamentals meet near-term momentum — both boxes checked at the same time.
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Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Exlservice (+271% between June 2020 and June 2025). Find your next big winner with StockStory today.
