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.
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 reinvests wisely to drive long-term success and two best left off your watchlist.
Two Stocks to Sell:
Jack in the Box (JACK)
Trailing 12-Month Free Cash Flow Margin: 2.7%
Delighting customers since its inception in 1951, Jack in the Box (NASDAQ:JACK) is a distinctive fast-food chain known for its bold flavors, innovative menu items, and quirky marketing.
Why Should You Sell JACK?
- Disappointing same-store sales over the past two years show customers aren’t responding well to its menu offerings and dining experience
- Expenses have increased as a percentage of revenue over the last year as its operating margin fell by 24.2 percentage points
- 10× net-debt-to-EBITDA ratio shows it’s overleveraged and increases the probability of shareholder dilution if things turn unexpectedly
Jack in the Box is trading at $19.80 per share, or 3.8x forward P/E. Dive into our free research report to see why there are better opportunities than JACK.
Edgewell Personal Care (EPC)
Trailing 12-Month Free Cash Flow Margin: 1.4%
Boasting brands such as Banana Boat, Schick, and Skintimate, Edgewell Personal Care (NYSE:EPC) sells personal care products in the skin and sun care, shave, and feminine care categories.
Why Do We Pass on EPC?
- Core business is underperforming as its organic revenue has disappointed over the past two years, suggesting it might need acquisitions to stimulate growth
- Capital intensity has ramped up over the last year as its free cash flow margin decreased by 8.3 percentage points
- ROIC of 6.2% reflects management’s challenges in identifying attractive investment opportunities
Edgewell Personal Care’s stock price of $25.35 implies a valuation ratio of 7.7x forward P/E. If you’re considering EPC for your portfolio, see our FREE research report to learn more.
One Stock to Buy:
Graham Corporation (GHM)
Trailing 12-Month Free Cash Flow Margin: 2.6%
Founded when its founder patented a unique design for a vacuum system used in the sugar refining process, Graham (NYSE:GHM) provides vacuum and heat transfer equipment for the energy, petrochemical, refining, and chemical sectors.
Why Do We Love GHM?
- Annual revenue growth of 15.6% over the last two years was superb and indicates its market share increased during this cycle
- Incremental sales over the last two years have been highly profitable as its earnings per share increased by 645% annually, topping its revenue gains
- Free cash flow margin increased by 6.5 percentage points over the last five years, giving the company more capital to invest or return to shareholders
At $45.40 per share, Graham Corporation trades at 38.9x forward P/E. Is now a good time to buy? See for yourself in our full research report, it’s free.
Stocks We Like Even More
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 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 Exlservice (+354% 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.