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. That said, here is one cash-producing company that reinvests wisely to drive long-term success and two that may struggle to keep up.

Two Stocks to Sell:

Shutterstock (SSTK)

Trailing 12-Month Free Cash Flow Margin: 12.5%

Originally featuring a library that included many of founder Jon Oringer’s photos, Shutterstock (NYSE: SSTK) is now a digital platform where customers can license and use hundreds of millions of pieces of content.

Why Should You Sell SSTK?

1. Customer spending has dipped by 73.7% on average as it focused on growing its requests
2. Estimated sales decline of 10% for the next 12 months implies a challenging demand environment
3. Flat earnings per share over the last three years underperformed the sector average

At $16.56 per share, Shutterstock trades at 2.8x forward EV/EBITDA. Check out our free in-depth research report to learn more about why SSTK doesn’t pass our bar.

ACV Auctions (ACVA)

Trailing 12-Month Free Cash Flow Margin: 4.4%

Founded in 2014, ACV Auctions (NASDAQ: ACVA) is an online auction marketplace for car dealers and wholesalers to buy and sell used cars.

Why Do We Think Twice About ACVA?

1. Gross margin of 27.1% is below its competitors, leaving less money to invest in areas like marketing and R&D
2. Excessive marketing spend signals little organic demand and traction for its platform
3. Low free cash flow margin of 4.6% for the last two years gives it little breathing room, constraining its ability to self-fund growth or return capital to shareholders

ACV Auctions is trading at $4.36 per share, or 8.9x forward EV/EBITDA. If you’re considering ACVA for your portfolio, see our FREE research report to learn more.

One Stock to Watch:

MACOM (MTSI)

Trailing 12-Month Free Cash Flow Margin: 15.8%

Founded in the 1950s as Microwave Associates, a communications supplier to the US Army Signal Corp, today MACOM Technology Solutions (NASDAQ: MTSI) is a provider of analog chips used in optical, wireless, and satellite networks.

Why Are We Fans of MTSI?

1. Annual revenue growth of 27.8% over the last two years was superb and indicates its market share increased during this cycle
2. Offerings are difficult to replicate at scale and lead to a stellar gross margin of 54.5%
3. Earnings growth has comfortably beaten the peer group average over the last five years as its EPS has compounded at 22.2% annually

MACOM’s stock price of $238.24 implies a valuation ratio of 48.4x forward P/E. Is now the time to initiate a position? Find out in our full research report, it’s free.

High-Quality Stocks for All Market Conditions

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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-small-cap company Exlservice (+354% five-year return). Find your next big winner with StockStory today.