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. Keeping that in mind, 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:
The Toro Company (TTC)
Trailing 12-Month Free Cash Flow Margin: 12.8%
Ceasing all production to support the war effort during World War II, Toro (NYSE: TTC) offers outdoor equipment for residential, commercial, and agricultural use.
Why Do We Think TTC Will Underperform?
- Flat sales over the last two years suggest it must find different ways to grow during this cycle
- Flat earnings per share over the last two years lagged its peers
- Waning returns on capital imply its previous profit engines are losing steam
The Toro Company is trading at $84.50 per share, or 18.9x forward P/E. Read our free research report to see why you should think twice about including TTC in your portfolio.
Two Stocks to Watch:
Sezzle (SEZL)
Trailing 12-Month Free Cash Flow Margin: 13.4%
Founded in 2016 as an alternative to traditional credit cards for younger shoppers, Sezzle (NASDAQ: SEZL) provides a payment platform that allows consumers to split purchases into four interest-free installments over six weeks at participating retailers.
Why Do We Like SEZL?
- Annual revenue growth of 67.8% over the last two years was superb and indicates its market share increased during this cycle
- Additional sales over the last two years increased its profitability as the 173% annual growth in its earnings per share outpaced its revenue
Sezzle’s stock price of $76.39 implies a valuation ratio of 17.1x forward P/E. Is now the time to initiate a position? See for yourself in our comprehensive research report, it’s free for active Edge members .
Fair Isaac Corporation (FICO)
Trailing 12-Month Free Cash Flow Margin: 37.1%
Creator of the three-digit number that can determine whether you get a mortgage or credit card, Fair Isaac Corporation (NYSE: FICO) develops analytics software and the widely used FICO Score, which is the standard measure of consumer credit risk in the United States.
Why Should You Buy FICO?
- ARR trends over the past two years show it’s maintaining a steady flow of long-term contracts that contribute positively to its revenue predictability
- Robust free cash flow margin of 34.5% gives it many options for capital deployment, and its recently improved profitability means it has even more resources to invest or distribute
- Returns on capital are growing as management capitalizes on its market opportunities
At $1,586 per share, Fair Isaac Corporation trades at 39.3x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free for active Edge members.
Stocks We Like Even More
Your portfolio can’t afford to be based on yesterday’s story. The risk in a handful of heavily crowded stocks is rising daily.
The names generating the next wave of massive growth are right here 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 Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today.
