Generating cash is essential for any business, but not all cash-rich companies are great investments. Some produce plenty of cash but fail to allocate it effectively, leading to missed opportunities.
Luckily for you, we built StockStory to help you separate the good from the bad. Keeping that in mind, 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:
Shoals (SHLS)
Trailing 12-Month Free Cash Flow Margin: 3%
Started in Huntsville, Alabama, Shoals (NASDAQ: SHLS) designs and manufactures products that make solar energy systems work more efficiently.
Why Do We Think SHLS Will Underperform?
- Sales pipeline suggests its future revenue growth may not meet our standards as its average backlog growth of 3.3% for the past two years was weak
- 5.8 percentage point decline in its free cash flow margin over the last five years reflects the company’s increased investments to defend its market position
- Shrinking returns on capital from an already weak position reveal that neither previous nor ongoing investments are yielding the desired results
Shoals is trading at $7.43 per share, or 16.3x forward P/E. To fully understand why you should be careful with SHLS, check out our full research report (it’s free).
Oshkosh (OSK)
Trailing 12-Month Free Cash Flow Margin: 5.7%
Oshkosh (NYSE: OSK) manufactures specialty vehicles for the defense, fire, emergency, and commercial industry, operating various brand subsidiaries within each industry.
Why Does OSK Give Us Pause?
- New orders were hard to come by as its average backlog growth of 1.3% over the past two years underwhelmed
- Gross margin of 16.4% is below its competitors, leaving less money to invest in areas like marketing and R&D
- Free cash flow margin shrank by 7.3 percentage points over the last five years, suggesting the company is consuming more capital to stay competitive
Oshkosh’s stock price of $134.36 implies a valuation ratio of 11.9x forward P/E. If you’re considering OSK for your portfolio, see our FREE research report to learn more.
One Stock to Buy:
Vital Farms (VITL)
Trailing 12-Month Free Cash Flow Margin: 1.2%
With an emphasis on ethically produced products, Vital Farms (NASDAQ: VITL) specializes in pasture-raised eggs and butter.
Why Is VITL a Good Business?
- Stellar 20.1% growth in unit sales over the past two years demonstrates the high demand for its products
- Exciting sales outlook for the upcoming 12 months calls for 31.3% growth, an acceleration from its three-year trend
- Earnings per share grew by 109% annually over the last three years and trumped its peers
At $44.73 per share, Vital Farms trades at 31.5x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free.
Stocks We Like Even More
When Trump unveiled his aggressive tariff plan in April 2025, markets tanked as investors feared a full-blown trade war. But those who panicked and sold missed the subsequent rebound that’s already erased most losses.
Don’t let fear keep you from great opportunities and take a look at Top 6 Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).
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-small-cap company Comfort Systems (+782% five-year return). Find your next big winner with StockStory today for free. Find your next big winner with StockStory today. Find your next big winner with StockStory today
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