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 is one cash-producing company that reinvests wisely to drive long-term success and two best left off your watchlist.

Two Stocks to Sell:

Polaris (PII)

Trailing 12-Month Free Cash Flow Margin: 6.2%

Founded in 1954, Polaris (NYSE: PII) designs and manufactures high-performance off-road vehicles, snowmobiles, and motorcycles.

Why Do We Think PII Will Underperform?

1. Products and services have few die-hard fans as sales have declined by 13% annually over the last two years
2. Earnings per share fell by 25.6% annually over the last five years while its revenue grew, showing its incremental sales were much less profitable
3. Diminishing returns on capital suggest its earlier profit pools are drying up

Polaris’s stock price of $53.66 implies a valuation ratio of 7.1x forward EV-to-EBITDA. Read our free research report to see why you should think twice about including PII in your portfolio.

Dun & Bradstreet (DNB)

Trailing 12-Month Free Cash Flow Margin: 17.1%

Known for its proprietary D-U-N-S Number that serves as a unique identifier for businesses worldwide, Dun & Bradstreet (NYSE: DNB) provides business decisioning data and analytics that help companies evaluate credit risks, verify suppliers, enhance sales productivity, and gain market visibility.

Why Is DNB Risky?

1. 3.7% annual revenue growth over the last two years was slower than its business services peers
2. Costs have risen faster than its revenue over the last five years, causing its adjusted operating margin to decline by 5 percentage points
3. Earnings per share were flat over the last four years and fell short of the peer group average

At $9.10 per share, Dun & Bradstreet trades at 8.5x forward P/E. Dive into our free research report to see why there are better opportunities than DNB.

One Stock to Buy:

Copart (CPRT)

Trailing 12-Month Free Cash Flow Margin: 25.7%

Starting as a single salvage yard in California in 1982, Copart (NASDAQ: CPRT) operates an online auction platform that connects sellers of damaged and salvage vehicles with buyers ranging from dismantlers and rebuilders to used car dealers and exporters.

Why Is CPRT a Good Business?

1. Market share has increased this cycle as its 15.6% annual revenue growth over the last five years was exceptional
2. Impressive free cash flow profitability enables the company to fund new investments or reward investors with share buybacks/dividends, and its rising cash conversion increases its margin of safety
3. Stellar returns on capital showcase management’s ability to surface highly profitable business ventures

Copart is trading at $46.19 per share, or 27.2x forward P/E. Is now a good time to buy? See for yourself in our comprehensive research report, it’s free.

Stocks We Like Even More

Trump’s April 2025 tariff bombshell triggered a massive market selloff, but stocks have since staged an impressive recovery, leaving those who panic sold on the sidelines.

Take advantage of the rebound by checking 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 183% over the last five years (as of March 31st 2025).

Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-small-cap company Comfort Systems (+782% 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

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