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 best left off your watchlist.
Two Stocks to Sell:
PubMatic (PUBM)
Trailing 12-Month Free Cash Flow Margin: 16.3%
Powering billions of daily ad impressions across the open internet, PubMatic (NASDAQ: PUBM) operates a technology platform that helps publishers maximize revenue from their digital advertising inventory while giving advertisers more control and transparency.
Why Is PUBM Risky?
- Net revenue retention rate of 96% shows it has a tough time retaining customers
- Customer acquisition costs take a while to recoup, making it difficult to justify sales and marketing investments that could increase revenue
- Efficiency has decreased over the last year as its operating margin fell by 7.4 percentage points
At $9.54 per share, PubMatic trades at 1.6x forward price-to-sales. To fully understand why you should be careful with PUBM, check out our full research report (it’s free).
FTI Consulting (FCN)
Trailing 12-Month Free Cash Flow Margin: 2.5%
With a team of experts deployed across 30+ countries to tackle complex business challenges, FTI Consulting (NYSE: FCN) is a global business advisory firm that helps organizations manage change, mitigate risk, and resolve disputes across financial, legal, operational, and regulatory matters.
Why Does FCN Fall Short?
- Muted 4.2% annual revenue growth over the last two years shows its demand lagged behind its business services peers
- Earnings per share lagged its peers over the last two years as they only grew by 6.8% annually
- Free cash flow margin dropped by 7.9 percentage points over the last five years, implying the company became more capital intensive as competition picked up
FTI Consulting’s stock price of $185.39 implies a valuation ratio of 20.1x forward P/E. Read our free research report to see why you should think twice about including FCN in your portfolio.
One Stock to Watch:
Expedia (EXPE)
Trailing 12-Month Free Cash Flow Margin: 21.1%
Originally founded as a part of Microsoft, Expedia (NASDAQ: EXPE) is one of the world’s leading online travel agencies.
Why Are We Positive On EXPE?
- Platform is difficult to replicate at scale and leads to a best-in-class gross margin of 89.8%
- Highly efficient business model is illustrated by its impressive 22.6% EBITDA margin, and it turbocharged its profits by achieving some fixed cost leverage
- Performance over the past three years was turbocharged by share buybacks, which enabled its earnings per share to grow faster than its revenue
Expedia is trading at $263.39 per share, or 9x forward EV/EBITDA. Is now a good time to buy? See for yourself in our full research report, it’s free.
Stocks We Like Even More
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Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,326% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Comfort Systems (+782% five-year return). Find your next big winner with StockStory today.
