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.
Not all companies are created equal, and StockStory is here to surface the ones with real upside. Keeping that in mind, here is one cash-producing company that leverages its financial strength to beat its competitors and two best left off your watchlist.
Two Stocks to Sell:
UiPath (PATH)
Trailing 12-Month Free Cash Flow Margin: 22.4%
Starting with robotic process automation (RPA) and evolving into a comprehensive automation powerhouse, UiPath (NYSE: PATH) provides an AI-powered business automation platform that enables organizations to create software robots that mimic human actions to streamline repetitive tasks and processes.
Why Do We Think Twice About PATH?
- Annual revenue growth of 11.2% over the last two years was below our standards for the software sector
- Products, pricing, or go-to-market strategy may need some adjustments as its 9.3% average billings growth over the last year was weak
- Estimated sales growth of 8.2% for the next 12 months implies demand will slow from its two-year trend
UiPath is trading at $11.70 per share, or 3.4x forward price-to-sales. Read our free research report to see why you should think twice about including PATH in your portfolio.
Surgery Partners (SGRY)
Trailing 12-Month Free Cash Flow Margin: 6.2%
With more than 180 locations across 33 states serving as alternatives to traditional hospital settings, Surgery Partners (NASDAQ: SGRY) operates a national network of outpatient surgical facilities including ambulatory surgery centers and short-stay surgical hospitals.
Why Does SGRY Worry Us?
- Disappointing unit sales over the past two years suggest it might have to lower prices to accelerate growth
- Estimated sales growth of 3.2% for the next 12 months implies demand will slow from its two-year trend
- High net-debt-to-EBITDA ratio of 7× could force the company to raise capital on unfavorable terms if market conditions deteriorate
At $16.89 per share, Surgery Partners trades at 35.3x forward P/E. Check out our free in-depth research report to learn more about why SGRY doesn’t pass our bar.
One Stock to Buy:
Vertiv (VRT)
Trailing 12-Month Free Cash Flow Margin: 21.2%
Formerly part of Emerson Electric, Vertiv (NYSE: VRT) manufactures and services infrastructure technology products for data centers and communication networks.
Why Will VRT Beat the Market?
- Average organic revenue growth of 23.7% over the past two years demonstrates its ability to expand independently without relying on acquisitions
- Free cash flow margin increased by 22.4 percentage points over the last five years, giving the company more capital to invest or return to shareholders
- Returns on capital are growing as management capitalizes on its market opportunities
Vertiv’s stock price of $301.70 implies a valuation ratio of 44x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free.
High-Quality Stocks for All Market Conditions
ONE MORE THING: Top 6 Stocks for This Week. This market is separating quality stocks from expensive ones fast. AI is taking down whole sectors with no warning. In a rotation this fast, you need more than a list of good companies.
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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.
