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. Keeping that in mind, here is one cash-producing company that reinvests wisely to drive long-term success and two that may struggle to keep up.
Two Stocks to Sell:
Malibu Boats (MBUU)
Trailing 12-Month Free Cash Flow Margin: 4.8%
Founded in California in 1982, Malibu Boats (NASDAQ:MBUU) is a manufacturer of high-performance sports boats and luxury watercrafts.
Why Do We Avoid MBUU?
- Muted 1.5% annual revenue growth over the last five years shows its demand lagged behind its consumer discretionary peers
- Forecasted free cash flow margin suggests the company will fail to improve its cash conversion over the next year
- Shrinking returns on capital from an already weak position reveal that neither previous nor ongoing investments are yielding the desired results
Malibu Boats’s stock price of $29.52 implies a valuation ratio of 13.8x forward P/E. Check out our free in-depth research report to learn more about why MBUU doesn’t pass our bar.
Global Industrial (GIC)
Trailing 12-Month Free Cash Flow Margin: 6.1%
Formerly known as Systemax, Global Industrial (NYSE:GIC) distributes industrial and commercial products to businesses and institutions.
Why Are We Hesitant About GIC?
- Sales trends were unexciting over the last two years as its 3.3% annual growth was below the typical industrials company
- Flat earnings per share over the last two years underperformed the sector average
- Diminishing returns on capital suggest its earlier profit pools are drying up
At $39.45 per share, Global Industrial trades at 19x forward P/E. If you’re considering GIC for your portfolio, see our FREE research report to learn more.
One Stock to Buy:
RB Global (RBA)
Trailing 12-Month Free Cash Flow Margin: 11.1%
Born from the 1958 founding of Ritchie Bros. Auctioneers and rebranded in 2023, RB Global (NYSE:RBA) operates global marketplaces that connect buyers and sellers of commercial assets, vehicles, and equipment across multiple industries.
Why Should You Buy RBA?
- Impressive 27.4% annual revenue growth over the last five years indicates it’s winning market share this cycle
- Earnings per share have massively outperformed its peers over the last five years, increasing by 19.3% annually
- Impressive free cash flow profitability enables the company to fund new investments or reward investors with share buybacks/dividends
RB Global is trading at $87.01 per share, or 18.7x forward P/E. Is now the right time to buy? See for yourself in our comprehensive research report, it’s free.
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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 Tecnoglass (+1,552% between June 2020 and June 2025). Find your next big winner with StockStory today.