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.
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 excels at turning cash into shareholder value and two that may face some trouble.
Two Stocks to Sell:
Lumen (LUMN)
Trailing 12-Month Free Cash Flow Margin: 8.4%
With approximately 350,000 route miles of fiber optic cable spanning North America and the Asia Pacific, Lumen Technologies (NYSE: LUMN) operates a vast fiber optic network that provides communications, cloud connectivity, security, and IT solutions to businesses and consumers.
Why Should You Sell LUMN?
- Products and services are facing significant end-market challenges during this cycle as sales have declined by 9.7% annually over the last five years
- Earnings per share decreased by more than its revenue over the last five years, showing each sale was less profitable
- Capital intensity has ramped up over the last five years as its free cash flow margin decreased by 10.5 percentage points
Lumen is trading at $7.08 per share, or 7.2x forward EV-to-EBITDA. If you’re considering LUMN for your portfolio, see our FREE research report to learn more.
CME Group (CME)
Trailing 12-Month Free Cash Flow Margin: 64.3%
Born from the Chicago Mercantile Exchange founded in 1898 as a butter and egg trading venue, CME Group (NASDAQ: CME) operates the world's largest derivatives marketplace where traders can buy and sell futures and options contracts across interest rates, equities, currencies, commodities, and more.
Why Are We Hesitant About CME?
- Muted 6% annual revenue growth over the last five years shows its demand lagged behind its financials peers
- Earnings per share lagged its peers over the last two years as they only grew by 9.6% annually
CME Group’s stock price of $308.63 implies a valuation ratio of 25.4x forward P/E. Check out our free in-depth research report to learn more about why CME doesn’t pass our bar.
One Stock to Watch:
Tidewater (TDW)
Trailing 12-Month Free Cash Flow Margin: 26.1%
Operating one of the world's largest fleets with over 200 vessels spanning 30 countries, Tidewater (NYSE: TDW) operates offshore service vessels that transport supplies, equipment, and workers to oil rigs and platforms.
Why Are We Fans of TDW?
- Annual revenue growth of 27.8% over the past five years was outstanding, reflecting market share gains this cycle
- EBITDA profits increased over the last five years as the company gained some leverage on its fixed costs and became more efficient
- Robust free cash flow margin of 14.8% gives it many options for capital deployment
At $85.75 per share, Tidewater trades at 20.5x forward P/E. Is now the time to initiate a position? See for yourself in our comprehensive research report, it’s free.
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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 Comfort Systems (+782% five-year return). Find your next big winner with StockStory today.
