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.
Not all companies are created equal, and StockStory is here to surface the ones with real upside. Keeping that in mind, here is one cash-producing company that excels at turning cash into shareholder value and two that may face some trouble.
Two Stocks to Sell:
Torrid (CURV)
Trailing 12-Month Free Cash Flow Margin: 5.7%
Promoting a message of body positivity and inclusiveness, Torrid Holdings (NYSE: CURV) is a plus-size women’s apparel and accessories retailer.
Why Should You Dump CURV?
- Disappointing same-store sales over the past two years show customers aren’t responding well to its product selection and store experience
- Subscale operations are evident in its revenue base of $1.10 billion, meaning it has fewer distribution channels than its larger rivals
- Falling earnings per share over the last five years has some investors worried as stock prices ultimately follow EPS over the long term
At $5.51 per share, Torrid trades at 25.1x forward price-to-earnings. Read our free research report to see why you should think twice about including CURV in your portfolio.
Altice (ATUS)
Trailing 12-Month Free Cash Flow Margin: 1.7%
Based in Long Island City, Altice USA (NYSE: ATUS) is a telecommunications company offering cable, internet, telephone, and television services across the United States.
Why Do We Avoid ATUS?
- Sluggish trends in its broadband subscribers suggest customers aren’t adopting its solutions as quickly as the company hoped
- Sales were less profitable over the last five years as its earnings per share fell by 25.1% annually, worse than its revenue declines
- 7× net-debt-to-EBITDA ratio shows it’s overleveraged and increases the probability of shareholder dilution if things turn unexpectedly
Altice’s stock price of $2.28 implies a valuation ratio of 0.3x forward EV-to-EBITDA. Check out our free in-depth research report to learn more about why ATUS doesn’t pass our bar.
One Stock to Watch:
Workiva (WK)
Trailing 12-Month Free Cash Flow Margin: 11.7%
Founded in 2010, Workiva (NYSE: WK) offers software as a service product that makes financial and compliance reporting easier, especially for publicly traded corporations.
Why Could WK Be a Winner?
- ARR trends over the last year show it’s maintaining a steady flow of long-term contracts that contribute positively to its revenue predictability
- Projected revenue growth of 17.1% over the next 12 months is higher than most peers
- Software is difficult to replicate at scale and results in a top-tier gross margin of 76.7%
Workiva is trading at $69.71 per share, or 4.5x forward price-to-sales. Is now the right time to buy? Find out in our full research report, it’s free.
Stocks We Like Even More
Donald Trump’s victory in the 2024 U.S. Presidential Election sent major indices to all-time highs, but stocks have retraced as investors debate the health of the economy and the potential impact of tariffs.
While this leaves much uncertainty around 2025, a few companies are poised for long-term gains regardless of the political or macroeconomic climate, like our Top 5 Strong Momentum Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 175% over the last five years.
Stocks that made our list in 2019 include now familiar names such as Nvidia (+2,183% between December 2019 and December 2024) as well as under-the-radar businesses like United Rentals (+322% five-year return). Find your next big winner with StockStory today for free.
