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. 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:
Compass (COMP)
Trailing 12-Month Free Cash Flow Margin: 2.8%
Fueled by its mission to replace the "paper-driven, antiquated workflow" of buying a house, Compass (NYSE: COMP) is a digital-first company operating a residential real estate brokerage in the United States.
Why Do We Pass on COMP?
- Performance surrounding its principal agents has lagged its peers
- Suboptimal cost structure is highlighted by its history of operating margin losses
- Ability to fund investments or reward shareholders with increased buybacks or dividends is restricted by its weak free cash flow margin of 1.9% for the last two years
Compass is trading at $10.58 per share, or 17.2x forward P/E. To fully understand why you should be careful with COMP, check out our full research report (it’s free for active Edge members).
Kirby (KEX)
Trailing 12-Month Free Cash Flow Margin: 8.8%
Transporting goods along all U.S. coasts, Kirby (NYSE: KEX) provides inland and coastal marine transportation services.
Why Are We Wary of KEX?
- 4.7% annual revenue growth over the last two years was slower than its industrials peers
- Capital intensity has ramped up over the last five years as its free cash flow margin decreased by 4 percentage points
- ROIC of 3.6% reflects management’s challenges in identifying attractive investment opportunities
At $110.23 per share, Kirby trades at 16.3x forward P/E. Read our free research report to see why you should think twice about including KEX in your portfolio.
One Stock to Buy:
Planet Labs (PL)
Trailing 12-Month Free Cash Flow Margin: 14.4%
Pioneering the concept of "agile aerospace" with hundreds of small but powerful satellites, Planet Labs (NYSE: PL) operates the world's largest fleet of Earth observation satellites, capturing daily images of our planet to provide insights on deforestation, agriculture, and climate change.
Why Do We Love PL?
- Market share has increased this cycle as its 23.1% annual revenue growth over the last five years was exceptional
- Free cash flow flipped to positive over the last five years, indicating the company has passed a significant test
- Rising returns on capital show the company is starting to reap the benefits of its past investments
Planet Labs’s stock price of $19.70 implies a valuation ratio of 791.2x forward EV-to-EBITDA. Is now a good time to buy? See for yourself in our comprehensive research report, it’s free for active Edge members .
Stocks We Like Even More
If your portfolio success hinges on just 4 stocks, your wealth is built on fragile ground. You have a small window to secure high-quality assets before the market widens and these prices disappear.
Don’t wait for the next volatility shock. Check out our Top 5 Growth Stocks for this month. This is a curated list of our High Quality stocks that have generated a market-beating return of 244% over the last five years (as of June 30, 2025).
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 Kadant (+351% 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.
