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. That said, here is one cash-producing company that reinvests wisely to drive long-term success and two best left off your watchlist.

Two Stocks to Sell:

Strategic Education (STRA)

Trailing 12-Month Free Cash Flow Margin: 10%

Formed through the merger of Strayer Education and Capella Education in 2018, Strategic Education (NASDAQ: STRA) is a career-focused higher education provider.

Why Do We Think STRA Will Underperform?

1. Number of domestic students has disappointed over the past two years, indicating weak demand for its offerings
2. Incremental sales over the last five years were much less profitable as its earnings per share fell by 7.1% annually while its revenue grew
3. Low returns on capital reflect management’s struggle to allocate funds effectively

Strategic Education is trading at $81.16 per share, or 13.3x forward P/E. Check out our free in-depth research report to learn more about why STRA doesn’t pass our bar.

Carnival (CCL)

Trailing 12-Month Free Cash Flow Margin: 10.8%

Boasting outrageous amenities like a planetarium on board its ships, Carnival (NYSE: CCL) is one of the world's largest leisure travel companies and a prominent player in the cruise industry.

Why Is CCL Not Exciting?

1. Annual sales growth of 9% over the last five years lagged behind its consumer discretionary peers as its large revenue base made it difficult to generate incremental demand
2. Estimated sales growth of 4.1% for the next 12 months implies demand will slow from its two-year trend
3. Negative returns on capital show that some of its growth strategies have backfired

At $31.92 per share, Carnival trades at 16x forward P/E. Read our free research report to see why you should think twice about including CCL in your portfolio.

One Stock to Buy:

HCA Healthcare (HCA)

Trailing 12-Month Free Cash Flow Margin: 10%

With roots dating back to 1968 and a network spanning 20 states, HCA Healthcare (NYSE: HCA) operates a network of 190 hospitals and 150+ outpatient facilities providing a full range of medical services across the US and England.

Why Is HCA a Top Pick?

1. Massive revenue base of $72.7 billion in a highly regulated sector makes the company difficult to replace, giving it meaningful negotiating power
2. Share repurchases have amplified shareholder returns as its annual earnings per share growth of 17.5% exceeded its revenue gains over the last five years
3. Free cash flow margin jumped by 8.9 percentage points over the last five years, giving the company more resources to pursue growth initiatives, repurchase shares, or pay dividends

HCA Healthcare’s stock price of $401 implies a valuation ratio of 15x forward P/E. Is now the time to initiate a position? See for yourself in our in-depth research report, it’s free.

High-Quality Stocks for All Market Conditions

When Trump unveiled his aggressive tariff plan in April 2025, markets tanked as investors feared a full-blown trade war. But those who panicked and sold missed the subsequent rebound that’s already erased most losses.

Don’t let fear keep you from great opportunities and take a look at 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 183% over the last five years (as of March 31st 2025).

Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 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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