Generating cash is essential for any business, but not all cash-rich companies are great investments. Some produce plenty of cash but fail to allocate it effectively, leading to missed opportunities.
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 leverages its financial strength to beat its competitors and two that may face some trouble.
Two Stocks to Sell:
SAIC (SAIC)
Trailing 12-Month Free Cash Flow Margin: 6.5%
With over five decades of experience supporting national security missions, Science Applications International Corporation (NASDAQ: SAIC) provides technical, engineering, and enterprise IT services primarily to U.S. government agencies and military branches.
Why Should You Dump SAIC?
- Products and services are facing significant end-market challenges during this cycle as sales have declined by 2.1% annually over the last two years
- Estimated sales for the next 12 months are flat and imply a softer demand environment
SAIC’s stock price of $92.48 implies a valuation ratio of 10.2x forward P/E. If you’re considering SAIC for your portfolio, see our FREE research report to learn more.
LendingTree (TREE)
Trailing 12-Month Free Cash Flow Margin: 5.4%
Using the same comparison model that revolutionized travel booking, LendingTree (NASDAQ: TREE) operates an online platform that connects consumers with financial service providers across mortgages, personal loans, credit cards, insurance, and other financial products.
Why Does TREE Fall Short?
- 4.3% annual revenue growth over the last three years was slower than its consumer internet peers
- Excessive marketing spend signals little organic demand and traction for its platform
LendingTree is trading at $42.01 per share, or 6.2x forward EV/EBITDA. Read our free research report to see why you should think twice about including TREE in your portfolio.
One Stock to Buy:
Corpay (CPAY)
Trailing 12-Month Free Cash Flow Margin: 28.7%
Formerly known as FLEETCOR until its 2024 rebrand, Corpay (NYSE: CPAY) provides specialized payment solutions for businesses to manage vehicle expenses, corporate payments, and lodging costs with enhanced control and reporting capabilities.
Why Are We Backing CPAY?
- Offerings and unique value proposition resonate with customers, as seen in its above-market 13.6% annual sales growth over the last five years
- Earnings per share have outperformed the peer group average over the last five years, increasing by 14% annually
- ROE punches in at 31.1%, illustrating management’s expertise in identifying profitable investments
At $314.47 per share, Corpay trades at 12.5x forward P/E. 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.
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-small-cap company Exlservice (+354% five-year return). Find your next big winner with StockStory today.
