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 excels at turning cash into shareholder value and two best left off your watchlist.
Two Stocks to Sell:
Mission Produce (AVO)
Trailing 12-Month Free Cash Flow Margin: 2.8%
Founded in 1983 in California, Mission Produce (NASDAQ: AVO) grows, packages, and distributes avocados.
Why Do We Think Twice About AVO?
- Subscale operations are evident in its revenue base of $1.25 billion, meaning it has fewer distribution channels than its larger rivals
- Commoditized products, bad unit economics, and high competition are reflected in its low gross margin of 11.6%
- Below-average returns on capital indicate management struggled to find compelling investment opportunities
At $12.17 per share, Mission Produce trades at 16.3x forward P/E. Read our free research report to see why you should think twice about including AVO in your portfolio.
Ralph Lauren (RL)
Trailing 12-Month Free Cash Flow Margin: 9.2%
Originally founded as a necktie company, Ralph Lauren (NYSE: RL) is an iconic American fashion brand known for its classic and sophisticated style.
Why Do We Steer Clear of RL?
- Weak constant currency growth over the past two years indicates challenges in maintaining its market share
- Subpar operating margin of 14.4% constrains its ability to invest in process improvements or effectively respond to new competitive threats
- Free cash flow margin is expected to remain in place over the coming year
Ralph Lauren is trading at $416.15 per share, or 22.1x forward P/E. If you’re considering RL for your portfolio, see our FREE research report to learn more.
One Stock to Buy:
AppLovin (APP)
Trailing 12-Month Free Cash Flow Margin: 71.9%
Sitting at the crossroads of the mobile advertising ecosystem with over 200 free-to-play games in its portfolio, AppLovin (NASDAQ: APP) provides software solutions that help mobile app developers market, monetize, and grow their apps through AI-powered advertising and analytics tools.
Why Are We Backing APP?
- Annual revenue growth of 30.4% over the last two years was superb and indicates its market share is rising
- User-friendly software enables clients to ramp up spending quickly, leading to the speedy recovery of customer acquisition costs
- Strong free cash flow margin of 71.9% enables it to reinvest or return capital consistently
AppLovin’s stock price of $464.38 implies a valuation ratio of 17.9x forward price-to-sales. Is now the time to initiate a position? See for yourself in our comprehensive 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-micro-cap company Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today.
