A company that generates cash isn’t automatically a winner. Some businesses stockpile cash but fail to reinvest wisely, limiting their ability to expand.
Cash flow is valuable, but it’s not everything - StockStory helps you identify the companies that truly put it to work. That said, here are two cash-producing companies that leverage their financial strength to beat the competition and one that may face some trouble.
One Stock to Sell:
Valaris (VAL)
Trailing 12-Month Free Cash Flow Margin: 5.5%
Operating the world's largest fleet of offshore drilling rigs across six continents, Valaris (NYSE: VAL) provides offshore drilling rigs and crews to oil and gas companies exploring and producing in deep waters and shallow seas.
Why Are We Wary of VAL?
- Customers postponed purchases of its products and services this cycle as its revenue declined by 5% annually over the last ten years
- Costly operations and weak unit economics result in an inferior gross margin of 21.1% that must be offset through higher production volumes
- Cash-burning history makes us doubt the long-term viability of its business model
At $78.56 per share, Valaris trades at 15.2x forward P/E. Read our free research report to see why you should think twice about including VAL in your portfolio.
Two Stocks to Buy:
Atlassian (TEAM)
Trailing 12-Month Free Cash Flow Margin: 19.4%
Started by two Australian university friends who funded their startup with credit cards, Atlassian (NASDAQ: TEAM) provides software tools that help teams plan, track, collaborate, and share knowledge across organizations.
Why Are We Bullish on TEAM?
- Software is difficult to replicate at scale and leads to a stellar gross margin of 84.8%
- Fast payback periods on sales and marketing expenses allow the company to invest heavily and onboard many customers concurrently
- Free cash flow margin is forecasted to grow by 8.9 percentage points in the coming year, potentially giving the company more chips to play with
Atlassian is trading at $82.56 per share, or 3x forward price-to-sales. Is now the time to initiate a position? See for yourself in our in-depth research report, it’s free.
Dell (DELL)
Trailing 12-Month Free Cash Flow Margin: 7%
Founded by Michael Dell in his University of Texas dorm room in 1984 with just $1,000, Dell Technologies (NYSE: DELL) provides hardware, software, and services that help organizations build their IT infrastructure, manage cloud environments, and enable digital transformation.
Why Should You Buy DELL?
- Annual revenue growth of 22.2% over the past two years was outstanding, reflecting market share gains this cycle
- Share repurchases over the last two years enabled its annual earnings per share growth of 38.8% to outpace its revenue gains
- Returns on capital are climbing as management makes more lucrative bets
Dell’s stock price of $412.14 implies a valuation ratio of 22.3x 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
ONE MORE THING: Top 5 Growth Stocks. The biggest stock winners almost always had one thing in common before they ran. Revenue growing like crazy. Meta. CrowdStrike. Broadcom. Our AI flagged all three. They returned 315%, 314%, and 455%, respectively.
Find out which 5 stocks it’s flagging this month — FREE. Get Our Top 5 Growth Stocks for Free HERE.
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 Exlservice (+354% five-year return). Find your next big winner with StockStory today.
