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 struggle to keep up.
Two Stocks to Sell:
UiPath (PATH)
Trailing 12-Month Free Cash Flow Margin: 20.7%
Starting with robotic process automation (RPA) and evolving into a comprehensive automation powerhouse, UiPath (NYSE:PATH) provides an AI-powered business automation platform that enables organizations to create software robots that mimic human actions to streamline repetitive tasks and processes.
Why Does PATH Fall Short?
- Customers had second thoughts about committing to its platform over the last year as its billings plateaued
- Estimated sales growth of 9.6% for the next 12 months implies demand will slow from its two-year trend
- Poor expense management has led to operating margin losses
UiPath is trading at $13.77 per share, or 4.6x forward price-to-sales. Read our free research report to see why you should think twice about including PATH in your portfolio.
onsemi (ON)
Trailing 12-Month Free Cash Flow Margin: 21.9%
Spun out of Motorola in 1999 and built through a series of acquisitions, onsemi (NASDAQ:ON) is a global provider of analog chips specializing in autos, industrial applications, and power management in cloud data centers.
Why Does ON Give Us Pause?
- Annual sales declines of 13.9% for the past two years show its products and services struggled to connect with the market during this cycle
- Demand will likely be weak over the next 12 months as Wall Street expects flat revenue
- High input costs result in an inferior gross margin of 41.2% that must be offset through higher volumes
onsemi’s stock price of $49.91 implies a valuation ratio of 18.6x forward P/E. To fully understand why you should be careful with ON, check out our full research report (it’s free for active Edge members).
One Stock to Watch:
Tetra Tech (TTEK)
Trailing 12-Month Free Cash Flow Margin: 9.5%
With a 50-year legacy of "Leading with Science" and operations on all seven continents, Tetra Tech (NASDAQ:TTEK) provides high-end consulting and engineering services focused on water management, environmental solutions, and sustainable infrastructure for government and commercial clients worldwide.
Why Does TTEK Stand Out?
- Market share has increased this cycle as its 14.5% annual revenue growth over the last five years was exceptional
- Adjusted operating margin expanded by 2.3 percentage points over the last five years as it scaled and became more efficient
- Robust free cash flow margin of 9.6% gives it many options for capital deployment
At $34.76 per share, Tetra Tech trades at 23.3x forward P/E. Is now the right 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 5 Growth Stocks for this month. 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 for free. Find your next big winner with StockStory today. Find your next big winner with StockStory today
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