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. Keeping that in mind, here is one cash-producing company that leverages its financial strength to beat its competitors and two that may face some trouble.
Two Stocks to Sell:
Arhaus (ARHS)
Trailing 12-Month Free Cash Flow Margin: 5.9%
With an aesthetic that features natural materials such as reclaimed wood, Arhaus (NASDAQ:ARHS) is a high-end furniture retailer that sells everything from sofas to rugs to bookcases.
Why Does ARHS Give Us Pause?
- Lagging same-store sales over the past two years suggest it might have to change its pricing and marketing strategy to stimulate demand
- Revenue base of $1.36 billion puts it at a disadvantage compared to larger competitors exhibiting economies of scale
- Earnings per share fell by 13.8% annually over the last three years while its revenue grew, partly because it diluted shareholders
At $10.67 per share, Arhaus trades at 22.6x forward P/E. Read our free research report to see why you should think twice about including ARHS in your portfolio.
ADT (ADT)
Trailing 12-Month Free Cash Flow Margin: 16.9%
Founded in 1874 and headquartered in Boca Raton, Florida, ADT (NYSE:ADT) is a provider of security, automation, and smart home solutions, offering comprehensive services for home and business protection.
Why Are We Out on ADT?
- Products and services fail to spark excitement with consumers, as seen in its flat sales over the last five years
- Capital intensity will likely ramp up in the next year as its free cash flow margin is expected to contract by 2.2 percentage points
- Underwhelming 6.1% return on capital reflects management’s difficulties in finding profitable growth opportunities
ADT is trading at $8.17 per share, or 8.8x forward P/E. To fully understand why you should be careful with ADT, check out our full research report (it’s free).
One Stock to Watch:
Marvell Technology (MRVL)
Trailing 12-Month Free Cash Flow Margin: 20.3%
Moving away from a low margin storage device management chips in one of the biggest semiconductor business model pivots of the past decade, Marvell Technology (NASDAQ: MRVL) is a fabless designer of special purpose data processing and networking chips used by data centers, communications carriers, enterprises, and autos.
Why Does MRVL Stand Out?
- Annual revenue growth of 22% over the last five years was superb and indicates its market share increased during this cycle
- Operating profits and efficiency rose over the last five years as it benefited from some fixed cost leverage
- Free cash flow margin increased by 8 percentage points over the last five years, giving the company more capital to invest or return to shareholders
Marvell Technology’s stock price of $82.08 implies a valuation ratio of 25.1x forward P/E. Is now the right time to buy? See for yourself in our full research report, it’s free.
Stocks We Like Even More
Your portfolio can’t afford to be based on yesterday’s story. The risk in a handful of heavily crowded stocks is rising daily.
The names generating the next wave of massive growth are right here in our Top 6 Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 244% over the last five years (as of June 30, 2025).
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.
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