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 struggle to keep up.
Two Stocks to Sell:
Genco (GNK)
Trailing 12-Month Free Cash Flow Margin: 14.9%
Headquartered in NYC, Genco (NYSE:GNK) is a shipping company that transports dry bulk cargo along worldwide maritime routes.
Why Are We Out on GNK?
- Performance surrounding its owned vessels has lagged its peers
- Earnings per share have dipped by 43.6% annually over the past two years, which is concerning because stock prices follow EPS over the long term
- Free cash flow margin dropped by 6.5 percentage points over the last five years, implying the company became more capital intensive as competition picked up
Genco is trading at $13.51 per share, or 20.6x forward P/E. If you’re considering GNK for your portfolio, see our FREE research report to learn more.
CBIZ (CBZ)
Trailing 12-Month Free Cash Flow Margin: 4%
With over 120 offices across 33 states and a team of more than 6,700 professionals, CBIZ (NYSE:CBZ) provides accounting, tax, benefits, insurance brokerage, and advisory services to help small and mid-sized businesses manage their finances and operations.
Why Are We Wary of CBZ?
- Free cash flow margin shrank by 10.2 percentage points over the last five years, suggesting the company stepped up its investments to maintain its competitive edge
- Below-average returns on capital indicate management struggled to find compelling investment opportunities
- 6× net-debt-to-EBITDA ratio shows it’s overleveraged and increases the probability of shareholder dilution if things turn unexpectedly
CBIZ’s stock price of $71.04 implies a valuation ratio of 18.6x forward P/E. Read our free research report to see why you should think twice about including CBZ in your portfolio.
One Stock to Watch:
Granite Construction (GVA)
Trailing 12-Month Free Cash Flow Margin: 7.3%
Having played a role in the construction of the Hoover Dam, Granite Construction (NYSE:GVA) is a provider of infrastructure solutions for roads, bridges, and other projects.
Why Could GVA Be a Winner?
- Annual revenue growth of 12.2% over the past two years was outstanding, reflecting market share gains this cycle
- Earnings growth has massively outpaced its peers over the last two years as its EPS has compounded at 60.9% annually
- Returns on capital are increasing as management’s prior bets are starting to bear fruit
At $90.39 per share, Granite Construction trades at 8.4x forward EV-to-EBITDA. Is now a good time to buy? Find out in our full research report, it’s free.
High-Quality Stocks for All Market Conditions
The market surged in 2024 and reached record highs after Donald Trump’s presidential victory in November, but questions about new economic policies are adding much uncertainty for 2025.
While the crowd speculates what might happen next, we’re homing in on the companies that can succeed regardless of the political or macroeconomic environment. Put yourself in the driver’s seat and build a durable portfolio by checking out 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.