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.
Luckily for you, we built StockStory to help you separate the good from the bad. 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:
Dropbox (DBX)
Trailing 12-Month Free Cash Flow Margin: 36.9%
Originally named after the founders' tendency to "drop" files into a shared folder, Dropbox (NASDAQ: DBX) provides a content collaboration platform that helps individuals and teams store, organize, share, and work on files from anywhere.
Why Do We Steer Clear of DBX?
- Products, pricing, or go-to-market strategy need some adjustments as its billings have averaged 1.1% declines over the last year
- Sales are projected to be flat over the next 12 months and imply weak demand
- Operating margin expansion of 8.3 percentage points over the last year shows the company optimized its expenses
Dropbox is trading at $25.37 per share, or 2.5x forward price-to-sales. To fully understand why you should be careful with DBX, check out our full research report (it’s free).
Varonis Systems (VRNS)
Trailing 12-Month Free Cash Flow Margin: 21.2%
Beginning with protecting Windows file shares in 2005 and evolving into a comprehensive security platform, Varonis Systems (NASDAQ: VRNS) provides data security software that helps organizations protect sensitive information, detect threats, and comply with privacy regulations.
Why Is VRNS Not Exciting?
- Annual revenue growth of 11.8% over the last two years was below our standards for the software sector
- Expenses have increased as a percentage of revenue over the last year as its operating margin fell by 2.1 percentage points
- Projected 6.5 percentage point decline in its free cash flow margin next year reflects the company’s plans to increase its investments to defend its market position
At $23.73 per share, Varonis Systems trades at 4.2x forward price-to-sales. Check out our free in-depth research report to learn more about why VRNS doesn’t pass our bar.
One Stock to Watch:
AbbVie (ABBV)
Trailing 12-Month Free Cash Flow Margin: 36.8%
Born from a 2013 spinoff of Abbott Laboratories' pharmaceutical business, AbbVie (NYSE: ABBV) is a biopharmaceutical company that develops and markets medications for autoimmune diseases, cancer, neurological disorders, and other complex health conditions.
Why Are We Fans of ABBV?
- Dominant market position is represented by its $61.16 billion in revenue, which creates significant barriers to entry in this highly regulated industry
- Impressive free cash flow profitability enables the company to fund new investments or reward investors with share buybacks/dividends
- Stellar returns on capital showcase management’s ability to surface highly profitable business ventures
AbbVie’s stock price of $225.25 implies a valuation ratio of 15.4x forward P/E. Is now a good time to buy? Find out 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.
