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.
Not all companies are created equal, and StockStory is here to surface the ones with real upside. That said, 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:
Zoom (ZM)
Trailing 12-Month Free Cash Flow Margin: 39.8%
Once the verb that defined remote work during the pandemic ("let's Zoom later"), Zoom (NASDAQ: ZM) provides a cloud-based platform for video meetings, phone calls, team chat, and collaboration tools that helps businesses and individuals connect virtually.
Why Are We Out on ZM?
- Customers had second thoughts about committing to its platform over the last year as its average billings growth of 4.8% underwhelmed
- Net revenue retention rate of 98.3% shows it has a tough time retaining customers
- Projected sales growth of 4.2% for the next 12 months suggests sluggish demand
Zoom is trading at $87.72 per share, or 5.1x forward price-to-sales. To fully understand why you should be careful with ZM, check out our full research report (it’s free).
Hain Celestial (HAIN)
Trailing 12-Month Free Cash Flow Margin: 2.9%
Sold in over 75 countries around the world, Hain Celestial (NASDAQ: HAIN) is a natural and organic food company whose products range from snacks to teas to baby food.
Why Should You Dump HAIN?
- Organic revenue growth fell short of our benchmarks over the past two years and implies it may need to improve its products, pricing, or go-to-market strategy
- Performance over the past three years shows each sale was less profitable as its earnings per share dropped by 32.1% annually, worse than its revenue
- 6× net-debt-to-EBITDA ratio makes lenders less willing to extend additional capital, potentially necessitating dilutive equity offerings
Hain Celestial’s stock price of $0.54 implies a valuation ratio of 10.1x forward P/E. Read our free research report to see why you should think twice about including HAIN in your portfolio.
One Stock to Watch:
Acuity Brands (AYI)
Trailing 12-Month Free Cash Flow Margin: 13.9%
One of the pioneers of smart lights, Acuity (NYSE: AYI) designs and manufactures light fixtures and building management systems used in various industries.
Why Are We Positive on AYI?
- Annual revenue growth of 9.8% over the last two years beat the sector average and underscores the unique value of its offerings
- Superior product capabilities and pricing power are reflected in its best-in-class gross margin of 45.6%
- Free cash flow margin grew by 8.6 percentage points over the last five years, giving the company more chips to play with
At $359.04 per share, Acuity Brands trades at 17.2x forward P/E. Is now the time to initiate a position? See for yourself in our in-depth research report, it’s free.
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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 Comfort Systems (+782% five-year return). Find your next big winner with StockStory today.
