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:
Universal Display (OLED)
Trailing 12-Month Free Cash Flow Margin: 37.8%
Serving major consumer electronics manufacturers, Universal Display (NASDAQ: OLED) is a provider of organic light emitting diode (OLED) technologies used in display and lighting applications.
Why Does OLED Worry Us?
- 1.2% annual revenue growth over the last two years was slower than its semiconductor peers
- Demand will likely be soft over the next 12 months as Wall Street’s estimates imply tepid growth of 6.2%
- Earnings per share grew by 7.8% annually over the last five years and slightly topped the peer group average
At $86.90 per share, Universal Display trades at 18.7x forward P/E. Check out our free in-depth research report to learn more about why OLED doesn’t pass our bar.
Macy's (M)
Trailing 12-Month Free Cash Flow Margin: 4.6%
With a storied history that began with its 1858 founding, Macy’s (NYSE: M) is a department store chain that sells clothing, cosmetics, accessories, and home goods.
Why Do We Avoid M?
- Recent store closures and weak same-store sales point to soft demand and an operational restructuring
- Disappointing same-store sales over the past two years show customers aren’t responding well to its product selection and store experience
- Earnings per share have dipped by 17.8% annually over the past three years, which is concerning because stock prices follow EPS over the long term
Macy's is trading at $23.50 per share, or 11.1x forward P/E. Read our free research report to see why you should think twice about including M in your portfolio.
One Stock to Watch:
Clean Harbors (CLH)
Trailing 12-Month Free Cash Flow Margin: 9.1%
Established in 1980, Clean Harbors (NYSE: CLH) provides environmental and industrial services like hazardous and non-hazardous waste disposal and emergency spill cleanups.
Why Are We Fans of CLH?
- Annual revenue growth of 14.4% over the last five years was superb and indicates its market share increased during this cycle
- Share buybacks catapulted its annual earnings per share growth to 24.9%, which outperformed its revenue gains over the last five years
- Free cash flow margin grew by 5.3 percentage points over the last five years, giving the company more chips to play with
Clean Harbors’s stock price of $298.63 implies a valuation ratio of 34.3x forward P/E. Is now the time to initiate a position? See for yourself in our in-depth research report, it’s free.
Stocks We Like Even More
ALSO WORTH WATCHING: Top 5 Momentum Stocks. The best time to own a great stock is when the market is finally noticing it. These aren’t just high-quality businesses. Something is happening with them right now. Elite fundamentals meet near-term momentum — both boxes checked at the same time.
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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 Exlservice (+354% five-year return). Find your next big winner with StockStory today.
