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.
Luckily for you, we built StockStory to help you separate the good from the bad. Keeping that in mind, here is one cash-producing company that leverages its financial strength to beat its competitors and two that may face some trouble.
Two Stocks to Sell:
nLIGHT (LASR)
Trailing 12-Month Free Cash Flow Margin: 13.4%
Founded by a former CEO and Harvard-educated entrepreneur Scott Keeneyn, nLIGHT (NASDAQ:LASR) offers semiconductor and fiber lasers to the industrial, aerospace & defense, and medical sectors.
Why Are We Wary of LASR?
- Muted 3.8% annual revenue growth over the last five years shows its demand lagged behind its industrials peers
- Suboptimal cost structure is highlighted by its history of operating margin losses
- Cash-burning history makes us doubt the long-term viability of its business model
nLIGHT’s stock price of $39.60 implies a valuation ratio of 106.7x forward P/E. Check out our free in-depth research report to learn more about why LASR doesn’t pass our bar.
PulteGroup (PHM)
Trailing 12-Month Free Cash Flow Margin: 9.2%
Having delivered over 850,000 homes since its founding in 1950, PulteGroup (NYSE:PHM) is one of America's largest homebuilders, constructing single-family homes, townhouses, and condominiums for first-time, move-up, and active adult buyers across 46 markets in 25 states.
Why Does PHM Fall Short?
- Products and services are facing significant end-market challenges during this cycle as sales have declined by 1.3% annually over the last two years
- Earnings per share have contracted by 12.2% annually over the last two years, a headwind for returns as stock prices often echo long-term EPS performance
- Eroding returns on capital suggest its historical profit centers are aging
At $116.59 per share, PulteGroup trades at 11.2x forward P/E. If you’re considering PHM for your portfolio, see our FREE research report to learn more.
One Stock to Watch:
Gartner (IT)
Trailing 12-Month Free Cash Flow Margin: 19.9%
With over 2,500 research experts guiding organizations through complex technology landscapes, Gartner (NYSE:IT) provides research, advisory services, and conferences that help executives make better decisions about technology and other business priorities.
Why Could IT Be a Winner?
- Offerings and unique value proposition resonate with customers, as seen in its above-market 8.1% annual sales growth over the last five years
- Robust free cash flow margin of 19.8% gives it many options for capital deployment
- Improving returns on capital reflect management’s ability to monetize investments
Gartner is trading at $170.86 per share, or 11x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free.
Stocks We Like Even More
ONE MORE THING: Top 6 Stocks for This Week. This market is separating quality stocks from expensive ones fast. AI is taking down whole sectors with no warning. In a rotation this fast, you need more than a list of good companies.
Our AI system flagged Palantir before it ran 1,662% between October 2022 and February 2026. AppLovin before it ran 753% between February 2024 and February 2026. Nvidia before it ran 1,178% between January 2023 and February 2026. Each week it produces 6 new names that pass the same tests. Get Our Top 6 Stocks for Free HERE.
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Comfort Systems (+1,154% between June 2020 and June 2025). Find your next big winner with StockStory today.