1 Cash-Producing Stock to Own for Decades and 2 We Brush Off
A company that generates cash isn’t automatically a winner. Some businesses stockpile cash but fail to reinvest wisely, limiting their ability to expand.
Cash flow is valuable, but it’s not everything - StockStory helps you identify the companies that truly put it to work. That said, 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:
Palo Alto Networks (PANW)
Trailing 12-Month Free Cash Flow Margin: 35.8%
Founded in 2005 by security visionary Nir Zuk who sought to reimagine firewall technology, Palo Alto Networks (NASDAQ:PANW) provides AI-powered cybersecurity platforms that protect organizations' networks, clouds, and endpoints from sophisticated threats.
Why Are We Hesitant About PANW?
- Gross margin of 70.4% reflects its relatively high servicing costs
- Extended payback periods on sales investments suggest the company’s platform isn’t resonating enough to drive efficient sales conversions
- Operating margin dropped by 7.4 percentage points over the last year as the company focused on expansion rather than profitability
Palo Alto Networks’s stock price of $388.97 implies a valuation ratio of 22.7x forward price-to-sales. Read our free research report to see why you should think twice about including PANW in your portfolio.
Travel + Leisure (TNL)
Trailing 12-Month Free Cash Flow Margin: 10.8%
Formerly known as Wyndham Destinations, Travel + Leisure (NYSE:TNL) is a global vacation company that provides travelers with vacation ownership, exchange, and travel services.
Why Do We Avoid TNL?
- Demand for its offerings was relatively low as its number of tours conducted has underwhelmed
- Eroding returns on capital from an already low base indicate that management’s recent investments are destroying value
- High net-debt-to-EBITDA ratio of 7× could force the company to raise capital on unfavorable terms if market conditions deteriorate
At $62.82 per share, Travel + Leisure trades at 7.5x forward P/E. If you’re considering TNL for your portfolio, see our FREE research report to learn more.
One Stock to Buy:
Charles Schwab (SCHW)
Trailing 12-Month Free Cash Flow Margin: 41.5%
Founded in 1971 as a disruptive force challenging Wall Street's high fees and limited access, Charles Schwab (NYSE:SCHW) is a wealth management and brokerage firm that provides investment services, banking, and financial advice to individual investors and independent advisors.
Why Is SCHW a Top Pick?
- Impressive 18.6% annual revenue growth over the last two years indicates it’s winning market share this cycle
- Share buybacks catapulted its annual earnings per share growth to 40.3%, which outperformed its revenue gains over the last two years
- Stellar return on equity showcases management’s ability to surface highly profitable business ventures
Charles Schwab is trading at $99.40 per share, or 13.8x 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
WHILE YOU’RE HERE: Top 9 Market-Beating Stocks. The best stocks don’t just beat the market once. They do it again. And again. Robust revenue growth, rising free cash flow, returns on capital that leave their competition in the dust. The market has already rewarded these businesses.
But our AI platform says the party isn’t over. Find out which 9 stocks made the cut this week — FREE. Get Our Top 9 Market-Beating 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-micro-cap company Kadant (+214% between June 2020 and June 2025). Find your next big winner with StockStory today.