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 leverages its financial strength to beat its competitors and two that may struggle to keep up.
Two Stocks to Sell:
ArcBest (ARCB)
Trailing 12-Month Free Cash Flow Margin: 2%
Historically owning furniture, banking, and other subsidiaries, ArcBest (NASDAQ: ARCB) offers full-truckload, less-than-truckload, and intermodal deliveries of freight.
Why Do We Avoid ARCB?
- Flat unit sales over the past two years indicate demand is soft and that the company may need to revise its strategy
- Sales were less profitable over the last two years as its earnings per share fell by 23.1% annually, worse than its revenue declines
- Diminishing returns on capital suggest its earlier profit pools are drying up
ArcBest’s stock price of $86.28 implies a valuation ratio of 24.2x forward P/E. To fully understand why you should be careful with ARCB, check out our full research report (it’s free).
UFP Technologies (UFPT)
Trailing 12-Month Free Cash Flow Margin: 14.6%
With expertise dating back to 1963 in specialized materials and precision manufacturing, UFP Technologies (NASDAQ: UFPT) designs and manufactures custom solutions for medical devices, sterile packaging, and other highly engineered products for healthcare and industrial applications.
Why Do We Think Twice About UFPT?
- Smaller revenue base of $598 million means it hasn’t achieved the economies of scale that some industry juggernauts enjoy
- Estimated sales growth of 4.6% for the next 12 months implies demand will slow from its two-year trend
At $273.50 per share, UFP Technologies trades at 25.8x forward P/E. If you’re considering UFPT for your portfolio, see our FREE research report to learn more.
One Stock to Buy:
Arthur J. Gallagher (AJG)
Trailing 12-Month Free Cash Flow Margin: 13.6%
Founded in 1927 and operating in approximately 130 countries through direct operations and correspondent networks, Arthur J. Gallagher (NYSE: AJG) provides insurance brokerage, reinsurance, consulting, and third-party claims settlement services to businesses and individuals worldwide.
Why Is AJG a Good Business?
- Annual revenue growth of 16% over the past two years was outstanding, reflecting market share gains this cycle
- Earnings per share grew by 18.7% annually over the last five years, massively outpacing its peers
- Impressive free cash flow profitability enables the company to fund new investments or reward investors with share buybacks/dividends
Arthur J. Gallagher is trading at $256.94 per share, or 20.1x forward P/E. Is now the time to initiate a position? See for yourself in our comprehensive research report, it’s free.
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 6 Stocks for this week. 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.
