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.
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 excels at turning cash into shareholder value and two best left off your watchlist.
Two Stocks to Sell:
Microchip Technology (MCHP)
Trailing 12-Month Free Cash Flow Margin: 17.9%
Spun out from General Instrument in 1987, Microchip Technology (NASDAQ: MCHP) is a leading provider of microcontrollers and integrated circuits used mainly in the automotive world, especially in electric vehicles and their charging devices.
Why Should You Dump MCHP?
- Sales tumbled by 4.2% annually over the last five years, showing market trends are working against its favor during this cycle
- Performance over the past five years shows each sale was less profitable as its earnings per share dropped by 20.6% annually, worse than its revenue
- 14.5 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
Microchip Technology’s stock price of $75.83 implies a valuation ratio of 37.1x forward P/E. If you’re considering MCHP for your portfolio, see our FREE research report to learn more.
CONMED (CNMD)
Trailing 12-Month Free Cash Flow Margin: 10.8%
With over five decades of experience in surgical innovation since its founding in 1970, CONMED (NYSE: CNMD) develops and manufactures medical devices and equipment for surgical procedures, specializing in orthopedic and general surgery products.
Why Does CNMD Fall Short?
- Annual revenue growth of 5.1% over the last two years was below our standards for the healthcare sector
- Modest revenue base of $1.37 billion gives it less fixed cost leverage and fewer distribution channels than larger companies
- Projected sales decline of 1.4% for the next 12 months points to a tough demand environment ahead
CONMED is trading at $38.42 per share, or 8.6x forward P/E. To fully understand why you should be careful with CNMD, check out our full research report (it’s free).
One Stock to Buy:
CLEAR Secure (YOU)
Trailing 12-Month Free Cash Flow Margin: 33.4%
Recognized by its signature blue lanes and biometric pods at airport checkpoints across America, CLEAR Secure (NYSE: YOU) provides biometric identity verification technology that allows subscribers to bypass regular security lines at airports and access secure experiences at various venues.
Why Are We Backing YOU?
- Market share has increased as its 23.2% annual revenue growth over the last two years was exceptional
- Software is difficult to replicate at scale and leads to a best-in-class gross margin of 86%
- Highly efficient business model is illustrated by its impressive 19.2% operating margin, and its rise over the last year was fueled by some leverage on its fixed costs
At $32.54 per share, CLEAR Secure trades at 3.3x forward price-to-sales. Is now the right time to buy? Find out in our full research report, it’s free.
High-Quality Stocks for All Market Conditions
Your portfolio can’t afford to be based on yesterday’s story. The risk in a handful of heavily crowded stocks is rising daily.
The names generating the next wave of massive growth are right here in 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-small-cap company Exlservice (+354% five-year return). Find your next big winner with StockStory today.
