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.
Cash flow is valuable, but it’s not everything - StockStory helps you identify the companies that truly put it to work. That said, here is one cash-producing company that reinvests wisely to drive long-term success and two that may face some trouble.
Two Stocks to Sell:
Wyndham (WH)
Trailing 12-Month Free Cash Flow Margin: 15.9%
Established in 1981, Wyndham (NYSE: WH) is a global hotel franchising company with over 9,000 hotels across nearly 95 countries on six continents.
Why Does WH Fall Short?
- Revenue per room has underperformed over the past two years, suggesting it may need to develop new facilities
- Demand will likely be soft over the next 12 months as Wall Street’s estimates imply tepid growth of 4.2%
- Low returns on capital reflect management’s struggle to allocate funds effectively
Wyndham’s stock price of $83.42 implies a valuation ratio of 16.8x forward P/E. Check out our free in-depth research report to learn more about why WH doesn’t pass our bar.
Omnicell (OMCL)
Trailing 12-Month Free Cash Flow Margin: 11%
Driven by the vision of an "Autonomous Pharmacy" with zero medication errors, Omnicell (NASDAQ: OMCL) provides medication management automation and adherence tools that help healthcare systems and pharmacies reduce errors and improve efficiency.
Why Is OMCL Risky?
- Products and services are facing significant end-market challenges during this cycle as sales have declined by 5.4% annually over the last two years
- Modest revenue base of $1.14 billion gives it less fixed cost leverage and fewer distribution channels than larger companies
- Incremental sales over the last five years were much less profitable as its earnings per share fell by 7.6% annually while its revenue grew
At $31.29 per share, Omnicell trades at 16.8x forward P/E. If you’re considering OMCL for your portfolio, see our FREE research report to learn more.
One Stock to Watch:
SPX Technologies (SPXC)
Trailing 12-Month Free Cash Flow Margin: 12.6%
SPX Technologies (NYSE: SPXC) is an industrial conglomerate catering to the energy, manufacturing, automotive, and aerospace sectors.
Why Does SPXC Stand Out?
- Market share has increased this cycle as its 13.5% annual revenue growth over the last two years was exceptional
- Operating margin improvement of 7.6 percentage points over the last five years demonstrates its ability to scale efficiently
- Earnings per share have massively outperformed its peers over the last two years, increasing by 25.5% annually
SPX Technologies is trading at $157.70 per share, or 24.7x forward P/E. Is now the time to initiate a position? 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 6 Stocks for this week. 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-micro-cap company Kadant (+351% five-year return). Find your next big winner with StockStory today for free.
