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.
Cash flow is valuable, but it’s not everything - StockStory helps you identify the companies that truly put it to work. Keeping that in mind, 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:
Qualys (QLYS)
Trailing 12-Month Free Cash Flow Margin: 41.6%
Originally developed to address the growing complexity of IT security in the cloud era, Qualys (NASDAQ:QLYS) provides a cloud-based platform that helps organizations identify, manage, and protect their IT assets from cyber threats across on-premises, cloud, and mobile environments.
Why Is QLYS Not Exciting?
- Underwhelming ARR growth of 10.1% over the last year suggests the company faced challenges in acquiring and retaining long-term customers
- Estimated sales growth of 8.1% for the next 12 months implies demand will slow from its two-year trend
- Operating profits and efficiency rose over the last year as it benefited from some fixed cost leverage
Qualys is trading at $128.81 per share, or 6.7x forward price-to-sales. To fully understand why you should be careful with QLYS, check out our full research report (it’s free).
Mettler-Toledo (MTD)
Trailing 12-Month Free Cash Flow Margin: 22.6%
With roots dating back to the precision balance innovations of Swiss engineer Erhard Mettler, Mettler-Toledo (NYSE:MTD) manufactures precision weighing instruments, analytical equipment, and product inspection systems used in laboratories, industrial settings, and food retail.
Why Are We Hesitant About MTD?
- Sales stagnated over the last two years and signal the need for new growth strategies
- Organic revenue growth fell short of our benchmarks over the past two years and implies it may need to improve its products, pricing, or go-to-market strategy
- Expenses have increased as a percentage of revenue over the last two years as its adjusted operating margin fell by 1.4 percentage points
Mettler-Toledo’s stock price of $1,406 implies a valuation ratio of 32.3x forward P/E. Check out our free in-depth research report to learn more about why MTD doesn’t pass our bar.
One Stock to Watch:
HubSpot (HUBS)
Trailing 12-Month Free Cash Flow Margin: 17.8%
Born from the idea that traditional interruptive marketing was becoming less effective, HubSpot (NYSE:HUBS) provides an integrated platform that helps businesses attract, engage, and manage customer relationships through marketing, sales, service, and content management tools.
Why Does HUBS Stand Out?
- Winning new contracts that can potentially increase in value as its billings growth has averaged 19.8% over the last year
- Software is difficult to replicate at scale and leads to a stellar gross margin of 84.1%
- Free cash flow margin is forecasted to grow by 1.9 percentage points in the coming year, potentially giving the company more chips to play with
At $322.36 per share, HubSpot trades at 4.8x forward price-to-sales. Is now a good time to buy? Find out in our full research report, it’s free.
Stocks We Like Even More
Check out the high-quality names we’ve flagged 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.