1 Cash-Producing Stock Worth Investigating and 2 We Ignore

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 leverages its financial strength to beat its competitors and two best left off your watchlist.

Two Stocks to Sell:

Petco (WOOF)

Trailing 12-Month Free Cash Flow Margin: 2.7%

Historically known for its window displays of pets for sale or adoption, Petco (NASDAQ:WOOF) is a specialty retailer of pet food and supplies as well as a provider of services such as wellness checks and grooming.

Why Are We Out on WOOF?

1. Disappointing same-store sales over the past two years show customers aren’t responding well to its product selection and store experience
2. Performance over the past three years was negatively impacted by new share issuances as its earnings per share fell by 34.5% annually while its revenue was flat
3. 6× net-debt-to-EBITDA ratio makes lenders less willing to extend additional capital, potentially necessitating dilutive equity offerings

At $2.75 per share, Petco trades at 11.9x forward P/E. Read our free research report to see why you should think twice about including WOOF in your portfolio.

Collegium Pharmaceutical (COLL)

Trailing 12-Month Free Cash Flow Margin: 41.4%

Pioneering abuse-deterrent technology in a field plagued by addiction concerns, Collegium Pharmaceutical (NASDAQ:COLL) develops and markets specialty medications for treating moderate to severe pain, including abuse-deterrent opioid formulations.

Why Does COLL Give Us Pause?

1. Revenue base of $796.3 million puts it at a disadvantage compared to larger competitors exhibiting economies of scale
2. Day-to-day expenses have swelled relative to revenue over the last two years as its adjusted operating margin fell by 6.4 percentage points
3. ROIC hasn’t moved, making investors question whether its recent investments can increase profitability

Collegium Pharmaceutical is trading at $36 per share, or 4.7x forward P/E. Dive into our free research report to see why there are better opportunities than COLL.

One Stock to Watch:

Globus Medical (GMED)

Trailing 12-Month Free Cash Flow Margin: 19.7%

With operations spanning 64 countries and a portfolio of over 10 new products launched in 2023 alone, Globus Medical (NYSE:GMED) develops and sells implantable devices, surgical instruments, and technology solutions for spine, orthopedic, and neurosurgical procedures.

Why Could GMED Be a Winner?

1. Annual revenue growth of 30.3% over the past five years was outstanding, reflecting market share gains this cycle
2. Average constant currency growth of 22.8% over the past two years demonstrates its ability to grow internationally despite currency fluctuations
3. Earnings per share have massively outperformed its peers over the last five years, increasing by 22.2% annually

Globus Medical’s stock price of $80.29 implies a valuation ratio of 17x forward P/E. Is now the right time to buy? See for yourself in our in-depth research report, it’s free.

High-Quality Stocks for All Market Conditions

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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-small-cap company Comfort Systems (+1,154% between June 2020 and June 2025). Find your next big winner with StockStory today.