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. Keeping that in mind, here is one cash-producing company that reinvests wisely to drive long-term success and two that may face some trouble.
Two Stocks to Sell:
H&R Block (HRB)
Trailing 12-Month Free Cash Flow Margin: 15.3%
Founded in 1955 by brothers Henry W. Bloch and Richard A. Bloch, H&R Block (NYSE: HRB) is a tax preparation company offering professional tax assistance and financial solutions to individuals and small businesses.
Why Is HRB Not Exciting?
- Lackluster 4.2% annual revenue growth over the last two years indicates the company is losing ground to competitors
- Demand will likely be soft over the next 12 months as Wall Street’s estimates imply tepid growth of 3.2%
H&R Block’s stock price of $43.36 implies a valuation ratio of 8.8x forward P/E. Dive into our free research report to see why there are better opportunities than HRB.
Generac (GNRC)
Trailing 12-Month Free Cash Flow Margin: 9.7%
With its name deriving from a combination of “generating” and “AC”, Generac (NYSE: GNRC) offers generators and other power products for residential, industrial, and commercial use.
Why Are We Hesitant About GNRC?
- 4.2% annual revenue growth over the last two years was slower than its industrials peers
- Day-to-day expenses have swelled relative to revenue over the last five years as its operating margin fell by 9.5 percentage points
- Waning returns on capital imply its previous profit engines are losing steam
Generac is trading at $140.81 per share, or 18.7x forward P/E. Read our free research report to see why you should think twice about including GNRC in your portfolio.
One Stock to Buy:
Zscaler (ZS)
Trailing 12-Month Free Cash Flow Margin: 27.2%
Pioneering the "zero trust" approach that has fundamentally changed enterprise network security, Zscaler (NASDAQ: ZS) provides a cloud-based security platform that connects users, devices, and applications securely without traditional network-based security hardware.
Why Will ZS Beat the Market?
- Ability to secure long-term commitments with customers is evident in its 22.6% ARR growth over the last year
- Estimated revenue growth of 22.6% for the next 12 months implies its momentum over the last two years will continue
- Strong free cash flow margin of 27.2% enables it to reinvest or return capital consistently
At $281.08 per share, Zscaler trades at 13.4x forward price-to-sales. Is now a good time to buy? Find out in our full research report, it’s free for active Edge members.
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 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 for free. Find your next big winner with StockStory today. Find your next big winner with StockStory today
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