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.
Cash flow is valuable, but it’s not everything - StockStory helps you identify the companies that truly put it to work. 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:
Deere (DE)
Trailing 12-Month Free Cash Flow Margin: 14.2%
Revolutionizing agriculture with the first self-polishing cast-steel plow in the 1800s, Deere (NYSE: DE) manufactures and distributes advanced agricultural, construction, forestry, and turf care equipment.
Why Do We Think Twice About DE?
- Customers postponed purchases of its products and services this cycle as its revenue declined by 12.3% annually over the last two years
- Shrinking returns on capital suggest that increasing competition is eating into the company’s profitability
- High net-debt-to-EBITDA ratio of 7× could force the company to raise capital at unfavorable terms if market conditions deteriorate
At $663.27 per share, Deere trades at 34.7x forward P/E. Dive into our free research report to see why there are better opportunities than DE.
Taylor Morrison Home (TMHC)
Trailing 12-Month Free Cash Flow Margin: 9.6%
Named “America’s Most Trusted Home Builder” in 2019, Taylor Morrison Home (NYSE: TMHC) builds single family homes and communities across the United States.
Why Does TMHC Worry Us?
- Product roadmap and go-to-market strategy need to be reconsidered as its backlog has averaged 33.6% declines over the past two years
- Projected sales decline of 17.2% for the next 12 months points to a tough demand environment ahead
- Earnings growth underperformed the sector average over the last two years as its EPS grew by just 3.8% annually
Taylor Morrison Home’s stock price of $67.91 implies a valuation ratio of 13.1x forward P/E. Check out our free in-depth research report to learn more about why TMHC doesn’t pass our bar.
One Stock to Buy:
Palantir Technologies (PLTR)
Trailing 12-Month Free Cash Flow Margin: 50.7%
Named after the all-seeing stones in "Lord of the Rings," Palantir Technologies (NASDAQ: PLTR) develops software platforms that help government agencies and enterprises integrate, analyze, and operationalize their data for decision-making.
Why Are We Bullish on PLTR?
- Average billings growth of 59.5% over the last year enhances its liquidity and shows there is steady demand for its products
- Fast payback periods on sales and marketing expenses allow the company to invest heavily and onboard many customers concurrently
- Robust free cash flow margin of 50.7% gives it many options for capital deployment
Palantir Technologies is trading at $134.55 per share, or 47.8x forward price-to-sales. Is now the time to initiate a position? Find out in our full research report, it’s free.
High-Quality Stocks for All Market Conditions
If your portfolio success hinges on just 4 stocks, your wealth is built on fragile ground. You have a small window to secure high-quality assets before the market widens and these prices disappear.
Don’t wait for the next volatility shock. Check out our Top 9 Market-Beating Stocks. 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.
