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.
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 reinvests wisely to drive long-term success and two that may face some trouble.
Two Stocks to Sell:
DoubleVerify (DV)
Trailing 12-Month Free Cash Flow Margin: 17.7%
Using advanced analytics to evaluate over 17 billion digital ad transactions daily, DoubleVerify (NYSE: DV) provides AI-powered technology that verifies digital ads are viewable, fraud-free, brand-suitable, and displayed in the intended geographic location.
Why Is DV Risky?
- Revenue increased by 13.7% annually over the last two years, acceptable on an absolute basis but tepid for a software company enjoying secular tailwinds
- Extended payback periods on sales investments suggest the company’s platform isn’t resonating enough to drive efficient sales conversions
- Static operating margin over the last year shows it couldn’t become more efficient
At $10.46 per share, DoubleVerify trades at 4.3x forward price-to-sales. Dive into our free research report to see why there are better opportunities than DV.
SAIC (SAIC)
Trailing 12-Month Free Cash Flow Margin: 7.9%
With over five decades of experience supporting national security missions, Science Applications International Corporation (NASDAQ: SAIC) provides technical, engineering, and enterprise IT services primarily to U.S. government agencies and military branches.
Why Do We Think SAIC Will Underperform?
- Products and services are facing significant end-market challenges during this cycle as sales have declined by 1.2% annually over the last two years
- Projected sales decline of 1.9% over the next 12 months indicates demand will continue deteriorating
SAIC is trading at $92.65 per share, or 9.7x forward P/E. To fully understand why you should be careful with SAIC, check out our full research report (it’s free).
One Stock to Buy:
Gorman-Rupp (GRC)
Trailing 12-Month Free Cash Flow Margin: 12.7%
Powering fluid dynamics since 1934, Gorman-Rupp (NYSE: GRC) has evolved from its Ohio origins into a global manufacturer and seller of pumps and pump systems.
Why Should You Buy GRC?
- Impressive 14.9% annual revenue growth over the last five years indicates it’s winning market share this cycle
- Additional sales over the last two years increased its profitability as the 30% annual growth in its earnings per share outpaced its revenue
- Free cash flow margin increased by 6.2 percentage points over the last five years, giving the company more capital to invest or return to shareholders
Gorman-Rupp’s stock price of $77.05 implies a valuation ratio of 2.9x trailing 12-month price-to-sales. Is now a good time to buy? Find out in our full research report, it’s free.
Stocks We Like Even More
WHILE YOU’RE HERE: Top 9 Market-Beating Stocks. The best stocks don't just beat the market once. They do it again. And again. Robust revenue growth, rising free cash flow, returns on capital that leave their competition in the dust. The market has already rewarded these businesses.
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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-micro-cap company Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today.
