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1 Cash-Producing Stock Worth Your Attention and 2 Facing Challenges
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.
Cash flow is valuable, but it’s not everything - StockStory helps you identify the companies that truly put it to work. That said, here is one cash-producing company that excels at turning cash into shareholder value and two that may face some trouble.
Two Stocks to Sell:
Manhattan Associates (MANH)
Trailing 12-Month Free Cash Flow Margin: 35.4%
Built on a "versionless" cloud architecture that delivers quarterly updates to all customers, Manhattan Associates (NASDAQ:MANH) develops cloud-based software that helps retailers, wholesalers, and manufacturers manage their supply chains, inventory, and omnichannel operations.
Why Does MANH Worry Us?
- Offerings struggled to generate meaningful interest as its average billings growth of 6.5% over the last year did not impress
- Sky-high servicing costs result in an inferior gross margin of 55.8% that must be offset through increased usage
- Costs have risen faster than its revenue over the last year, causing its operating margin to decline by 1.5 percentage points
At $202.13 per share, Manhattan Associates trades at 9.9x forward price-to-sales. If you’re considering MANH for your portfolio, see our FREE research report to learn more.
Sphere Entertainment (SPHR)
Trailing 12-Month Free Cash Flow Margin: 26.5%
Famous for its viral Las Vegas Sphere venue, Sphere Entertainment (NYSE:SPHR) hosts live entertainment events and distributes content across various media platforms.
Why Do We Think SPHR Will Underperform?
- Sales trends were unexciting over the last five years as its 10.8% annual growth was below the typical consumer discretionary company
- Capital intensity will likely ramp up in the next year as its free cash flow margin is expected to contract by 5.3 percentage points
- Negative earnings profile makes it challenging to secure favorable financing terms from lenders
Sphere Entertainment is trading at $107.22 per share, or 13.7x forward EV-to-EBITDA. To fully understand why you should be careful with SPHR, check out our full research report (it’s free).
One Stock to Buy:
DXP (DXPE)
Trailing 12-Month Free Cash Flow Margin: 5.5%
Founded during the emergence of Big Oil in Texas, DXP (NASDAQ:DXPE) provides pumps, valves, and other industrial components.
Why Are We Bullish on DXPE?
- Annual revenue growth of 16.8% over the past five years was outstanding, reflecting market share gains this cycle
- Share repurchases over the last two years enabled its annual earnings per share growth of 22.5% to outpace its revenue gains
- Free cash flow margin grew by 4 percentage points over the last five years, giving the company more chips to play with
DXP’s stock price of $179.82 implies a valuation ratio of 26.7x forward P/E. Is now a good time to buy? See for yourself in our full research report, it’s free.
High-Quality Stocks for All Market Conditions
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 (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Tecnoglass (+1,552% between June 2020 and June 2025). Find your next big winner with StockStory today.