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 struggle to keep up.
Two Stocks to Sell:
Impinj (PI)
Trailing 12-Month Free Cash Flow Margin: 17%
Founded by Caltech professor Carver Mead and one of his students Chris Diorio, Impinj (NASDAQ: PI) is a maker of radio-frequency identification (RFID) hardware and software.
Why Does PI Worry Us?
- Annual revenue growth of 8.6% over the last two years was above the sector average and underscores its products and services value to customers
- Historical operating margin losses point to an inefficient cost structure
- Negative returns on capital show that some of its growth strategies have backfired
At $163.43 per share, Impinj trades at 64.6x forward P/E. Dive into our free research report to see why there are better opportunities than PI.
Alta (ALTG)
Trailing 12-Month Free Cash Flow Margin: 2.8%
Founded in 1984, Alta Equipment Group (NYSE: ALTG) is a provider of industrial and construction equipment and services across the Midwest and Northeast United States.
Why Do We Pass on ALTG?
- Sales tumbled by 2.6% annually over the last two years, showing market trends are working against it during this cycle
- Historically negative EPS is a worrisome sign for conservative investors and obscures its long-term earnings potential
- 5× net-debt-to-EBITDA ratio shows it’s overleveraged and increases the probability of shareholder dilution if things turn unexpectedly
Alta’s stock price of $6.18 implies a valuation ratio of 5.7x forward EV-to-EBITDA. To fully understand why you should be careful with ALTG, check out our full research report (it’s free).
One Stock to Buy:
Kirby (KEX)
Trailing 12-Month Free Cash Flow Margin: 13.6%
Transporting goods along all U.S. coasts, Kirby (NYSE: KEX) provides inland and coastal marine transportation services.
What Makes KEX Stand Out?
- Annual revenue growth of 11.3% over the past five years was outstanding, reflecting market share gains this cycle
- Share repurchases over the last five years enabled its annual earnings per share growth of 47.2% to outpace its revenue gains
- Free cash flow margin jumped by 10.4 percentage points over the last five years, giving the company more resources to pursue growth initiatives, repurchase shares, or pay dividends
Kirby is trading at $139.91 per share, or 17.9x forward P/E. Is now the time to initiate a position? Find out in our full research report, it’s free.
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Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Tecnoglass (+1,552% between June 2020 and June 2025). Find your next big winner with StockStory today.
