Generating cash is essential for any business, but not all cash-rich companies are great investments. Some produce plenty of cash but fail to allocate it effectively, leading to missed opportunities.
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 excels at turning cash into shareholder value and two best left off your watchlist.
Two Stocks to Sell:
VSE Corporation (VSEC)
Trailing 12-Month Free Cash Flow Margin: 2.4%
With roots dating back to 1959 and a strategic focus on extending the life of transportation assets, VSE Corporation (NASDAQ: VSEC) provides aftermarket parts distribution and maintenance, repair, and overhaul services for aircraft and vehicle fleets in commercial and government markets.
Why Do We Think Twice About VSEC?
- Gross margin of 17.3% is below its competitors, leaving less money to invest in areas like marketing and R&D
- Cash-burning tendencies make us wonder if it can sustainably generate shareholder value
- Underwhelming 5.1% return on capital reflects management’s difficulties in finding profitable growth opportunities
At $174.50 per share, VSE Corporation trades at 43.9x forward P/E. Check out our free in-depth research report to learn more about why VSEC doesn’t pass our bar.
AdaptHealth (AHCO)
Trailing 12-Month Free Cash Flow Margin: 6.5%
With a network of approximately 680 locations serving patients across all 50 states, AdaptHealth (NASDAQ: AHCO) provides home medical equipment, supplies, and related services to patients with chronic conditions like sleep apnea, diabetes, and respiratory disorders.
Why Are We Cautious About AHCO?
- Annual revenue growth of 2.1% over the last two years was below our standards for the healthcare sector
- Issuance of new shares over the last five years caused its earnings per share to fall by 1.3% annually while its revenue grew
- Low returns on capital reflect management’s struggle to allocate funds effectively, and its falling returns suggest its earlier profit pools are drying up
AdaptHealth is trading at $10.07 per share, or 12x forward P/E. Dive into our free research report to see why there are better opportunities than AHCO.
One Stock to Watch:
MACOM (MTSI)
Trailing 12-Month Free Cash Flow Margin: 19.2%
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 Positive On MTSI?
- Impressive 22.1% annual revenue growth over the last two years indicates it’s winning market share this cycle
- Offerings are difficult to replicate at scale and lead to a premier gross margin of 54.4%
- Earnings growth has massively outpaced its peers over the last five years as its EPS has compounded at 29.1% annually
MACOM’s stock price of $189.87 implies a valuation ratio of 44.2x forward P/E. Is now the time to initiate a position? See for yourself in our full research report, it’s free for active Edge members.
High-Quality Stocks for All Market Conditions
The market’s up big this year - but there’s a catch. Just 4 stocks account for half the S&P 500’s entire gain. That kind of concentration makes investors nervous, and for good reason. While everyone piles into the same crowded names, smart investors are hunting quality where no one’s looking - and paying a fraction of the price. Check out the high-quality names we’ve flagged 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-micro-cap company Kadant (+351% 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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