A company that generates cash isn’t automatically a winner. Some businesses stockpile cash but fail to reinvest wisely, limiting their ability to expand.
Not all companies are created equal, and StockStory is here to surface the ones with real upside. 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:
Brady (BRC)
Trailing 12-Month Free Cash Flow Margin: 12.2%
Founded in 1914 and evolving through more than a century of industrial innovation, Brady (NYSE: BRC) manufactures and supplies identification solutions and workplace safety products that help companies identify and protect their premises, products, and people.
Why Does BRC Give Us Pause?
- Absence of organic revenue growth over the past two years suggests it may have to lean into acquisitions to drive its expansion
- Modest revenue base of $1.46 billion gives it less fixed cost leverage and fewer distribution channels than larger companies
- 3.7 percentage point decline in its free cash flow margin over the last five years reflects the company’s increased investments to defend its market position
At $70.19 per share, Brady trades at 14.3x forward P/E. Dive into our free research report to see why there are better opportunities than BRC.
Plexus (PLXS)
Trailing 12-Month Free Cash Flow Margin: 8.9%
With over 20,000 team members across 26 global facilities, Plexus (NASDAQ: PLXS) designs, manufactures, and services complex electronic products for companies in aerospace/defense, healthcare, and industrial sectors.
Why Are We Cautious About PLXS?
- Customers postponed purchases of its products and services this cycle as its revenue declined by 3.6% annually over the last two years
- Earnings growth underperformed the sector average over the last two years as its EPS grew by just 5.2% annually
- Lacking free cash flow generation means it has few chances to reinvest for growth, repurchase shares, or distribute capital
Plexus’s stock price of $131.73 implies a valuation ratio of 18.1x forward P/E. If you’re considering PLXS for your portfolio, see our FREE research report to learn more.
One Stock to Watch:
Roblox (RBLX)
Trailing 12-Month Free Cash Flow Margin: 22.9%
Best known for its wide assortment of user-generated content, Roblox (NYSE: RBLX) is an online gaming platform and game creation system.
Why Does RBLX Catch Our Eye?
- Daily Active Users are rising, meaning the company can increase revenue without incurring additional customer acquisition costs if it can cross-sell additional products and features
- Word-of-mouth marketing drives organic user growth, eliminating the need for costly advertising campaigns
- Excellent EBITDA margin of 20.5% highlights the efficiency of its business model
Roblox is trading at $84.27 per share, or 50.1x forward EV/EBITDA. Is now a good time to buy? Find out in our full research report, it’s free.
Stocks We Like Even More
The market surged in 2024 and reached record highs after Donald Trump’s presidential victory in November, but questions about new economic policies are adding much uncertainty for 2025.
While the crowd speculates what might happen next, we’re homing in on the companies that can succeed regardless of the political or macroeconomic environment. Put yourself in the driver’s seat and build a durable portfolio 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.
