1 Cash-Producing Stock for Long-Term Investors and 2 Facing Challenges
A company that generates cash isn’t automatically a winner. Some businesses stockpile cash but fail to reinvest wisely, limiting their ability to expand.
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 reinvests wisely to drive long-term success and two best left off your watchlist.
Two Stocks to Sell:
Verra Mobility (VRRM)
Trailing 12-Month Free Cash Flow Margin: 9.6%
Aiming to wrap technology and data around a historically manual and paper-based industry, Verra Mobility (NASDAQ:VRRM) is a leading provider of smart mobility technology to address tolls and violations, title and registration services, as well as safety and traffic enforcement.
Why Do We Think Twice About VRRM?
- Sales are projected to tank by 8.8% over the next 12 months as demand evaporates
- Efficiency has decreased over the last five years as its operating margin fell by 9 percentage points
- 21.2 percentage point decline in its free cash flow margin over the last five years reflects the company’s increased investments to defend its market position
Verra Mobility is trading at $4.23 per share, or 4.5x forward P/E. Check out our free in-depth research report to learn more about why VRRM doesn’t pass our bar.
Privia Health (PRVA)
Trailing 12-Month Free Cash Flow Margin: 5.6%
Operating in 13 states and the District of Columbia with over 4,300 providers serving more than 4.8 million patients, Privia Health (NASDAQ:PRVA) is a technology-driven company that helps physicians optimize their practices, improve patient experiences, and transition to value-based care models.
Why Does PRVA Fall Short?
- Smaller revenue base of $2.36 billion means it hasn’t achieved the economies of scale that some industry juggernauts enjoy
- Ability to fund investments or reward shareholders with increased buybacks or dividends is restricted by its weak free cash flow margin of 4.7% for the last five years
- Negative returns on capital show management lost money while trying to expand the business
Privia Health’s stock price of $20.75 implies a valuation ratio of 18.8x forward P/E. If you’re considering PRVA for your portfolio, see our FREE research report to learn more.
One Stock to Buy:
Badger Meter (BMI)
Trailing 12-Month Free Cash Flow Margin: 17.1%
The developer of the world’s first frost-proof water meter in 1905, Badger Meter (NYSE:BMI) provides water control and measure equipment to various industries.
Why Do We Love BMI?
- Impressive 13.6% annual revenue growth over the last five years indicates it’s winning market share this cycle
- Performance over the past five years shows its incremental sales were extremely profitable, as its annual earnings per share growth of 17.5% outpaced its revenue gains
- Robust free cash flow margin of 15.6% gives it many options for capital deployment, and its recently improved profitability means it has even more resources to invest or distribute
At $132.55 per share, Badger Meter trades at 27.6x forward P/E. Is now a good time to buy? See for yourself in our comprehensive 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.