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 excels at turning cash into shareholder value and two that may face some trouble.
Two Stocks to Sell:
Levi's (LEVI)
Trailing 12-Month Free Cash Flow Margin: 5.2%
Credited for inventing the first pair of blue jeans in 1873, Levi's (NYSE: LEVI) is an apparel company renowned for its iconic denim products and classic American style.
Why Are We Out on LEVI?
- Weak constant currency growth over the past two years indicates challenges in maintaining its market share
- Projected sales growth of 3.1% for the next 12 months suggests sluggish demand
- Waning returns on capital from an already weak starting point displays the inefficacy of management’s past and current investment decisions
At $21.40 per share, Levi's trades at 15.3x forward P/E. If you’re considering LEVI for your portfolio, see our FREE research report to learn more.
Universal Technical Institute (UTI)
Trailing 12-Month Free Cash Flow Margin: 9.2%
Founded in 1965, Universal Technical Institute (NYSE: UTI) is a leading provider of technical training programs, specializing in automotive, diesel, collision repair, motorcycle, and marine technicians.
Why Do We Avoid UTI?
- Free cash flow margin is forecasted to shrink by 2.6 percentage points in the coming year, suggesting the company will consume more capital to keep up with its competitors
- Low returns on capital reflect management’s struggle to allocate funds effectively, and its shrinking returns suggest its past profit sources are losing steam
- Waning returns on capital from an already weak starting point displays the inefficacy of management’s past and current investment decisions
Universal Technical Institute is trading at $34.80 per share, or 16.4x forward EV-to-EBITDA. Check out our free in-depth research report to learn more about why UTI doesn’t pass our bar.
One Stock to Buy:
EVERTEC (EVTC)
Trailing 12-Month Free Cash Flow Margin: 22%
Operating one of Latin America's leading PIN debit networks called ATH, EVERTEC (NYSE: EVTC) is a payment transaction processor and financial technology provider that enables merchants and financial institutions across Latin America and the Caribbean to accept and process electronic payments.
Why Will EVTC Outperform?
- Impressive 18.2% annual revenue growth over the last two years indicates it’s winning market share this cycle
- Incremental sales over the last two years boosted profitability as its annual earnings per share growth of 19.4% outstripped its revenue performance
- Industry-leading 32.2% return on equity demonstrates management’s skill in finding high-return investments
EVERTEC’s stock price of $30.56 implies a valuation ratio of 8.6x forward P/E. Is now a good time to buy? See for yourself in our in-depth research report, it’s free for active Edge members.
High-Quality Stocks for All Market Conditions
When Trump unveiled his aggressive tariff plan in April 2025, markets tanked as investors feared a full-blown trade war. But those who panicked and sold missed the subsequent rebound that’s already erased most losses.
Don’t let fear keep you from great opportunities and take a look at 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).
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