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. 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 is one cash-producing company that reinvests wisely to drive long-term success and two that may face some trouble.\n\nTwo Stocks to Sell: \n\nFlywire (FLYW)\nTrailing 12-Month Free Cash Flow Margin: 16.2%\nOriginally created to process international tuition payments for universities, Flywire is a cross border payments processor and software platform focusing on complex, high-value transactions like education, healthcare and B2B payments.\n\nWhy Are We Hesitant About FLYW?\nHigh servicing costs result in a relatively inferior gross margin of 62.9% that must be offset through increased usage\nCustomer acquisition costs take a while to recoup, making it difficult to justify sales and marketing investments that could increase revenue\nTrack record of operating margin losses stem from its decision to pursue growth instead of profits\n\nFlywire is trading at $11.79 per share, or 2.3x forward price-to-sales.\n\nCars.com (CARS)\nTrailing 12-Month Free Cash Flow Margin: 15.8%\nOriginally started as a joint venture between several media companies including The Washington Post and The New York Times, Cars.com is a digital marketplace that connects new and used car buyers and sellers.\n\nWhy Does CARS Give Us Pause?\nLikely needs to improve its platform or increase its marketing budget for penetration to accelerate as its dealer customers were flat over the last two years\nEstimated sales growth of 1.9% for the next 12 months implies demand will slow from its three-year trend\nEarnings per share have dipped by 1.8% annually over the past three years, which is concerning because stock prices follow EPS over the long term\n\nCars.com’s stock price of $12.43 implies a valuation ratio of 3.6x forward EV/EBITDA.\n\nOne Stock to Watch: \n\nVertex Pharmaceuticals (VRTX)\nTrailing 12-Month Free Cash Flow Margin: 30.6%\nFounded in 1989 with a mission to create medicines that treat the underlying causes of disease rather than just symptoms, Vertex Pharmaceuticals develops and markets transformative medicines for serious diseases, with a focus on cystic fibrosis, sickle cell disease, and pain management.\n\nWhy Could VRTX Be a Winner?\n16.1% annual revenue growth over the last five years surpassed the sector average as its offerings resonated with customers\nEarnings growth has massively outpaced its peers over the last five years as its EPS has compounded at 15.9% annually\nStellar returns on capital showcase management’s ability to surface highly profitable business ventures\n\nAt $367.50 per share, Vertex Pharmaceuticals trades at 18.7x forward P/E. Is now a good time to buy?\n\nStocks We Like Even More\nTrump’s April 2025 tariff bombshell triggered a massive market selloff, but stocks have since staged an impressive recovery, leaving those who panic sold on the sidelines. Take advantage of the rebound by checking out 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 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-small-cap company Comfort Systems (+782% five-year return).

1 Cash-Producing Stock for Long-Term Investors and 2 We Brush Off

The article evaluates three publicly traded companies based on their free cash flow margins and long-term investment potential. It identifies Vertex Pharmaceuticals as a strong candidate for long-term investors due to its high free cash flow margin, strong revenue and earnings growth, and effective capital allocation. Flywire and Cars.com are flagged for caution due to high servicing costs, weak growth trajectories, and declining earnings. The piece also references a broader market recovery following Trump's April 2025 tariff announcement, noting that certain stocks have outperformed the market significantly over the past five years.