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.
Not all companies are created equal, and StockStory is here to surface the ones with real upside. Keeping that in mind, here is one cash-producing company that leverages its financial strength to beat its competitors and two that may struggle to keep up.
Two Stocks to Sell:
RingCentral (RNG)
Trailing 12-Month Free Cash Flow Margin: 21.2%
Built on its proprietary Message Video Phone (MVP) platform that unifies multiple communication methods, RingCentral (NYSE: RNG) provides AI-driven cloud communications and collaboration solutions that enable businesses to connect through voice, video, messaging, and contact center services.
Why Do We Think RNG Will Underperform?
- Customers had second thoughts about committing to its platform over the last year as its average billings growth of 5.2% underwhelmed
- Estimated sales growth of 4.5% for the next 12 months implies demand will slow from its two-year trend
- Operating profits increased over the last year as the company gained some leverage on its fixed costs and became more efficient
RingCentral’s stock price of $41.78 implies a valuation ratio of 1.3x forward price-to-sales. Read our free research report to see why you should think twice about including RNG in your portfolio.
Avery Dennison (AVY)
Trailing 12-Month Free Cash Flow Margin: 9.3%
Founded as Kum Kleen Products, Avery Dennison (NYSE: AVY) is a manufacturer of adhesive materials, display graphics, and packaging products, serving various industries.
Why Are We Wary of AVY?
- Organic revenue growth fell short of our benchmarks over the past two years and implies it may need to improve its products, pricing, or go-to-market strategy
- Projected sales growth of 3.8% for the next 12 months suggests sluggish demand
- Earnings per share lagged its peers over the last five years as they only grew by 4.3% annually
Avery Dennison is trading at $164.40 per share, or 16.2x forward P/E. Check out our free in-depth research report to learn more about why AVY doesn’t pass our bar.
One Stock to Watch:
Elevance Health (ELV)
Trailing 12-Month Free Cash Flow Margin: 3.3%
Formerly known as Anthem until its 2022 rebranding, Elevance Health (NYSE: ELV) is one of America's largest health insurers, serving approximately 47 million medical members through its network-based managed care plans.
Why Could ELV Be a Winner?
- Products and services resonate with customers, evidenced by its respectable 9.9% annualized sales growth over the last five years
- Enormous revenue base of $198.3 billion gives it leverage over plan holders and advantageous reimbursement terms with healthcare providers
- Market-beating returns on capital illustrate that management has a knack for investing in profitable ventures
At $414.37 per share, Elevance Health trades at 15.5x forward P/E. Is now a good time to buy? See for yourself in our in-depth research report, it’s free.
Stocks We Like Even More
ONE MORE THING: Top 5 Growth Stocks. The biggest stock winners almost always had one thing in common before they ran. Revenue growing like crazy. Meta. CrowdStrike. Broadcom. Our AI flagged all three. They returned 315%, 314%, and 455%, respectively.
Find out which 5 stocks it’s flagging this month — FREE. Get Our Top 5 Growth Stocks for Free HERE.
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.
