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 are two cash-producing companies that reinvest wisely to drive long-term success and one that may struggle to keep up.
One Stock to Sell:
Array (AD)
Trailing 12-Month Free Cash Flow Margin: 2.4%
Operating as a majority-owned subsidiary of Telephone and Data Systems since its founding in 1983, Array (NYSE: Array) is a regional wireless telecommunications provider serving 4.6 million customers across 21 states with mobile phone, internet, and IoT services.
Why Do We Pass on AD?
- Customers postponed purchases of its products and services this cycle as its revenue declined by 13.9% annually over the last five years
- Sales were less profitable over the last five years as its earnings per share fell by 26.8% annually, worse than its revenue declines
- Underwhelming 0.6% return on capital reflects management’s difficulties in finding profitable growth opportunities, and its decreasing returns suggest its historical profit centers are aging
At $49.06 per share, Array trades at 26.4x forward EV-to-EBITDA. Dive into our free research report to see why there are better opportunities than AD.
Two Stocks to Watch:
Confluent (CFLT)
Trailing 12-Month Free Cash Flow Margin: 3.3%
Built by the original creators of Apache Kafka, the popular open-source messaging system, Confluent (NASDAQ: CFLT) provides a data infrastructure platform that enables organizations to connect their applications, systems, and data layers around real-time data streams.
Why Are We Positive On CFLT?
- Average billings growth of 24.2% over the last year enhances its liquidity and shows there is steady demand for its products
- Sales outlook for the upcoming 12 months implies the business will stay on its desirable two-year growth trajectory
- Adequate gross margin of 74.3% gives it sufficient room to spend on marketing and product development
Confluent is trading at $30.73 per share, or 7.9x forward price-to-sales. Is now a good time to buy? Find out in our full research report, it’s free.
RB Global (RBA)
Trailing 12-Month Free Cash Flow Margin: 13.9%
Born from the 1958 founding of Ritchie Bros. Auctioneers and rebranded in 2023, RB Global (NYSE: RBA) operates global marketplaces that connect buyers and sellers of commercial assets, vehicles, and equipment across multiple industries.
Why Are We Backing RBA?
- Annual revenue growth of 27.2% over the past five years was outstanding, reflecting market share gains this cycle
- Earnings growth has massively outpaced its peers over the last five years as its EPS has compounded at 18.9% annually
- RBA is a free cash flow machine with the flexibility to invest in growth initiatives or return capital to shareholders
RB Global’s stock price of $106.80 implies a valuation ratio of 23.7x 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
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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.
