A company that generates cash isn’t automatically a winner. Some businesses stockpile cash but fail to reinvest wisely, limiting their ability to expand.
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 reinvests wisely to drive long-term success and two that may struggle to keep up.
Two Stocks to Sell:
Electronic Arts (EA)
Trailing 12-Month Free Cash Flow Margin: 24.9%
Best known for its Madden NFL and FIFA sports franchises, Electronic Arts (NASDAQ:EA) is one of the world’s largest video game publishers.
Why Is EA Not Exciting?
- Sales trends were unexciting over the last three years as its 2.1% annual growth was below the typical consumer internet company
- Sales are projected to remain flat over the next 12 months as demand decelerates from its three-year trend
- Efficiency has decreased over the last few years as its EBITDA margin fell by 8.1 percentage points
Electronic Arts’s stock price of $149.05 implies a valuation ratio of 14.9x forward EV/EBITDA. To fully understand why you should be careful with EA, check out our full research report (it’s free).
Sonos (SONO)
Trailing 12-Month Free Cash Flow Margin: 4.4%
A pioneer in connected home audio systems, Sonos (NASDAQ:SONO) offers a range of premium wireless speakers and sound systems.
Why Do We Avoid SONO?
- Annual revenue declines of 6.3% over the last two years indicate problems with its market positioning
- Persistent operating losses suggest the business manages its expenses poorly
- Negative returns on capital show that some of its growth strategies have backfired
Sonos is trading at $11.11 per share, or 53.6x forward P/E. If you’re considering SONO for your portfolio, see our FREE research report to learn more.
One Stock to Watch:
Cardinal Health (CAH)
Trailing 12-Month Free Cash Flow Margin: 1.1%
Operating as a critical link in the healthcare supply chain since 1979, Cardinal Health (NYSE:CAH) distributes pharmaceuticals and manufactures medical products for hospitals, pharmacies, and healthcare providers across the global healthcare supply chain.
Why Do We Like CAH?
- Dominant market position is represented by its $222.3 billion in revenue, which creates significant barriers to entry in this highly regulated industry
- Demand will likely accelerate over the next 12 months as its forecasted revenue growth of 8.4% is above its two-year trend
- Earnings per share grew by 7.7% annually over the last five years, above the peer group average
At $148.70 per share, Cardinal Health trades at 17x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free.
High-Quality Stocks for All Market Conditions
Donald Trump’s victory in the 2024 U.S. Presidential Election sent major indices to all-time highs, but stocks have retraced as investors debate the health of the economy and the potential impact of tariffs.
While this leaves much uncertainty around 2025, a few companies are poised for long-term gains regardless of the political or macroeconomic climate, like our Top 5 Growth Stocks for this month. This is a curated list of our High Quality stocks that have generated a market-beating return of 176% over the last five years.
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.