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 leverages its financial strength to beat its competitors and two that may struggle to keep up.
Two Stocks to Sell:
Marcus & Millichap (MMI)
Trailing 12-Month Free Cash Flow Margin: 9.3%
Founded in 1971, Marcus & Millichap (NYSE:MMI) specializes in commercial real estate investment sales, financing, research, and advisory services.
Why Should You Dump MMI?
- Lackluster 1.3% annual revenue growth over the last five years indicates the company is losing ground to competitors
- Low free cash flow margin of 3% for the last two years gives it little breathing room, constraining its ability to self-fund growth or return capital to shareholders
- Eroding returns on capital from an already low base indicate that management’s recent investments are destroying value
At $25.10 per share, Marcus & Millichap trades at 61.8x forward P/E. Read our free research report to see why you should think twice about including MMI in your portfolio.
Applied Industrial (AIT)
Trailing 12-Month Free Cash Flow Margin: 9.6%
Formerly called The Ohio Ball Bearing Company, Applied Industrial (NYSE:AIT) distributes industrial products–everything from power tools to industrial valves–and services to a wide variety of industries.
Why Are We Cautious About AIT?
- Core business is underperforming as its organic revenue has disappointed over the past two years, suggesting it might need acquisitions to stimulate growth
- Projected sales growth of 5.2% for the next 12 months suggests sluggish demand
- Earnings per share lagged its peers over the last two years as they only grew by 5% annually
Applied Industrial is trading at $273.14 per share, or 24.4x forward P/E. Dive into our free research report to see why there are better opportunities than AIT.
One Stock to Watch:
Brady (BRC)
Trailing 12-Month Free Cash Flow Margin: 10.4%
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 Are We Positive On BRC?
- Solid 7.5% annual revenue growth over the last five years indicates its offering’s solve complex business issues
- Share repurchases have amplified shareholder returns as its annual earnings per share growth of 15.7% exceeded its revenue gains over the last five years
- Impressive free cash flow profitability enables the company to fund new investments or reward investors with share buybacks/dividends
Brady’s stock price of $88.76 implies a valuation ratio of 17x forward P/E. Is now the time to initiate a position? See for yourself in our full 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 5 Strong Momentum 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 Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today.