1 Cash-Producing Stock on Our Buy List and 2 We Avoid

A company that generates cash isn’t automatically a winner. Some businesses stockpile cash but fail to reinvest wisely, limiting their ability to expand.

Not all companies are created equal, and StockStory is here to surface the ones with real upside. That said, 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:

Xponential Fitness (XPOF)

Trailing 12-Month Free Cash Flow Margin: 3.3%

Owner of CycleBar, Rumble, and Club Pilates, Xponential Fitness (NYSE:XPOF) is a boutique fitness brand offering diverse and specialized exercise experiences.

Why Do We Think Twice About XPOF?

1. Sales trends were unexciting over the last two years as its 9.3% annual growth was below the typical consumer discretionary company
2. Responsiveness to unforeseen market trends is restricted due to its substandard operating margin profitability
3. Negative returns on capital show management lost money while trying to expand the business

Xponential Fitness’s stock price of $10.30 implies a valuation ratio of 9.1x forward P/E. Check out our free in-depth research report to learn more about why XPOF doesn’t pass our bar.

APi (APG)

Trailing 12-Month Free Cash Flow Margin: 7.7%

Started in 1926 as an insulation contractor, APi (NYSE:APG) provides life safety solutions and specialty services for buildings and infrastructure.

Why Does APG Worry Us?

1. Annual revenue growth of 4.2% over the last two years was below our standards for the industrials sector
2. 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
3. Underwhelming 3.3% return on capital reflects management’s difficulties in finding profitable growth opportunities

APi is trading at $35.07 per share, or 23.5x forward P/E. To fully understand why you should be careful with APG, check out our full research report (it’s free).

One Stock to Buy:

Philip Morris (PM)

Trailing 12-Month Free Cash Flow Margin: 23%

Founded in 1847, Philip Morris International (NYSE:PM) manufactures and sells a wide range of tobacco and nicotine-containing products, including cigarettes, heated tobacco products, and oral nicotine pouches.

Why Are We Backing PM?

1. Products are seeing elevated demand as its unit sales averaged 3% growth over the past two years
2. Unique products and pricing power lead to a best-in-class gross margin of 65.3%
3. Strong free cash flow margin of 25.3% enables it to reinvest or return capital consistently

At $163.47 per share, Philip Morris trades at 20.3x forward P/E. Is now the time to initiate a position? See for yourself in our comprehensive research report, it’s free.

Stocks We Like Even More

Trump’s April 2025 tariff bombshell triggered a massive market selloff, but stocks have since staged an impressive recovery, leaving those who panic sold on the sidelines.

Take advantage of the rebound by checking out our Top 5 Strong Momentum Stocks for this week. 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 Comfort Systems (+782% five-year return). Find your next big winner with StockStory today for free.

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