A company that generates cash isn’t automatically a winner. Some businesses stockpile cash but fail to reinvest wisely, limiting their ability to expand.
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 reinvests wisely to drive long-term success and two best left off your watchlist.
Two Stocks to Sell:
Genuine Parts (GPC)
Trailing 12-Month Free Cash Flow Margin: 1.4%
Largely targeting the professional customer, Genuine Parts (NYSE:GPC) sells auto and industrial parts such as batteries, belts, bearings, and machine fluids.
Why Is GPC Not Exciting?
- Annual sales growth of 4.2% over the last six years lagged behind its consumer retail peers as its large revenue base made it difficult to generate incremental demand
- Weak same-store sales trends over the past two years suggest there may be few opportunities in its core markets to open new locations
- Day-to-day expenses have swelled relative to revenue over the last year as its operating margin fell by 2.1 percentage points
Genuine Parts’s stock price of $126.25 implies a valuation ratio of 15.3x forward P/E. Check out our free in-depth research report to learn more about why GPC doesn’t pass our bar.
Marcus & Millichap (MMI)
Trailing 12-Month Free Cash Flow Margin: 1.8%
Founded in 1971, Marcus & Millichap (NYSE:MMI) specializes in commercial real estate investment sales, financing, research, and advisory services.
Why Should You Sell MMI?
- Annual sales declines of 3.2% for the past five years show its products and services struggled to connect with the market
- Cash-burning history makes us doubt the long-term viability of its business model
- Waning returns on capital imply its previous profit engines are losing steam
Marcus & Millichap is trading at $30.21 per share, or 299.2x forward P/E. Dive into our free research report to see why there are better opportunities than MMI.
One Stock to Buy:
ServiceNow (NOW)
Trailing 12-Month Free Cash Flow Margin: 32.1%
Founded by Fred Luddy, who coded the company's initial prototype on a flight from San Francisco to London, ServiceNow (NYSE:NOW) is a software provider helping companies automate workflows across IT, HR, and customer service.
Why Will NOW Outperform?
- Sales pipeline is in good shape as its current remaining performance obligations (cRPO) averaged 22.3% growth over the last year
- Excellent operating margin highlights the efficiency of its business model, and it turbocharged its profits by achieving some fixed cost leverage
- Strong free cash flow margin enables it to reinvest or return capital consistently
At $1,017 per share, ServiceNow trades at 15.7x forward price-to-sales. Is now the time to initiate a position? See for yourself in our full research report, it’s free.
High-Quality Stocks for All Market Conditions
Market indices reached historic highs following Donald Trump’s presidential victory in November 2024, but the outlook for 2025 is clouded by new trade policies that could impact business confidence and growth.
While this has caused many investors to adopt a "fearful" wait-and-see approach, we’re leaning into our best ideas that can grow regardless of the political or macroeconomic climate. Take advantage of Mr. Market by checking out our Top 9 Market-Beating Stocks. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 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 for free.