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.
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 leverages its financial strength to beat its competitors and two that may struggle to keep up.
Two Stocks to Sell:
Zoom (ZM)
Trailing 12-Month Free Cash Flow Margin: 38.8%
Once the verb that defined remote work during the pandemic ("let's Zoom later"), Zoom (NASDAQ: ZM) provides a cloud-based platform for video meetings, phone calls, team chat, and collaboration tools that helps businesses and individuals connect virtually.
Why Do We Think ZM Will Underperform?
- Average billings growth of 4.4% over the last year was subpar, suggesting it struggled to push its software and might have to lower prices to stimulate demand
- Competitive market dynamics make it difficult to retain customers, leading to a weak 98% net revenue retention rate
- Anticipated sales growth of 3.2% for the next year implies demand will be shaky
Zoom is trading at $81.00 per share, or 5.2x forward price-to-sales. To fully understand why you should be careful with ZM, check out our full research report (it’s free).
Amtech (ASYS)
Trailing 12-Month Free Cash Flow Margin: 8.9%
Focusing on the silicon carbide and power semiconductor sectors, Amtech Systems (NASDAQ: ASYS) produces the machinery and related chemicals needed for manufacturing semiconductors.
Why Do We Avoid ASYS?
- Customers postponed purchases of its products and services this cycle as its revenue declined by 15.8% annually over the last two years
- Persistent operating margin losses suggest the business manages its expenses poorly
- Issuance of new shares over the last five years caused its earnings per share to fall by 17.8% annually while its revenue grew
Amtech’s stock price of $9.09 implies a valuation ratio of 80.7x forward P/E. If you’re considering ASYS for your portfolio, see our FREE research report to learn more.
One Stock to Watch:
IMAX (IMAX)
Trailing 12-Month Free Cash Flow Margin: 8.1%
Originally developed for World Expo '67 in Montreal as an innovative projection system, IMAX (NYSE: IMAX) provides proprietary large-format cinema technology and systems that deliver immersive movie experiences with enhanced image quality and sound.
Why Do We Like IMAX?
- Additional sales over the last two years increased its profitability as the 34.3% annual growth in its earnings per share outpaced its revenue
- Free cash flow margin grew by 26.4 percentage points over the last five years, giving the company more chips to play with
- Improving returns on capital suggest its past investments are beginning to deliver value
At $32.73 per share, IMAX trades at 25.7x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free.
High-Quality Stocks for All Market Conditions
When Trump unveiled his aggressive tariff plan in April 2025, markets tanked as investors feared a full-blown trade war. But those who panicked and sold missed the subsequent rebound that’s already erased most losses.
Don’t let fear keep you from great opportunities and take a look at 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 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 Exlservice (+354% 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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