1 Cash-Producing Stock for Long-Term Investors and 2 We Brush Off

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 reinvests wisely to drive long-term success and two that may face some trouble.

Two Stocks to Sell:

Flywire (FLYW)

Trailing 12-Month Free Cash Flow Margin: 16.2%

Originally created to process international tuition payments for universities, Flywire (NASDAQ:FLYW) is a cross border payments processor and software platform focusing on complex, high-value transactions like education, healthcare and B2B payments.

Why Are We Hesitant About FLYW?

1. High servicing costs result in a relatively inferior gross margin of 62.9% that must be offset through increased usage
2. Customer acquisition costs take a while to recoup, making it difficult to justify sales and marketing investments that could increase revenue
3. Track record of operating margin losses stem from its decision to pursue growth instead of profits

Flywire is trading at $11.79 per share, or 2.3x forward price-to-sales. If you’re considering FLYW for your portfolio, see our FREE research report to learn more.

Cars.com (CARS)

Trailing 12-Month Free Cash Flow Margin: 15.8%

Originally started as a joint venture between several media companies including The Washington Post and The New York Times, Cars.com (NYSE:CARS) is a digital marketplace that connects new and used car buyers and sellers.

Why Does CARS Give Us Pause?

1. Likely needs to improve its platform or increase its marketing budget for penetration to accelerate as its dealer customers were flat over the last two years
2. Estimated sales growth of 1.9% for the next 12 months implies demand will slow from its three-year trend
3. Earnings per share have dipped by 1.8% annually over the past three years, which is concerning because stock prices follow EPS over the long term

Cars.com’s stock price of $12.43 implies a valuation ratio of 3.6x forward EV/EBITDA. To fully understand why you should be careful with CARS, check out our full research report (it’s free).

One Stock to Watch:

Vertex Pharmaceuticals (VRTX)

Trailing 12-Month Free Cash Flow Margin: 30.6%

Founded in 1989 with a mission to create medicines that treat the underlying causes of disease rather than just symptoms, Vertex Pharmaceuticals (NASDAQ:VRTX) develops and markets transformative medicines for serious diseases, with a focus on cystic fibrosis, sickle cell disease, and pain management.

Why Could VRTX Be a Winner?

1. 16.1% annual revenue growth over the last five years surpassed the sector average as its offerings resonated with customers
2. Earnings growth has massively outpaced its peers over the last five years as its EPS has compounded at 15.9% annually
3. Stellar returns on capital showcase management’s ability to surface highly profitable business ventures

At $367.50 per share, Vertex Pharmaceuticals trades at 18.7x forward P/E. Is now a good time to buy? See for yourself in our in-depth 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 6 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. Find your next big winner with StockStory today. Find your next big winner with StockStory today

StockStory is growing and hiring equity analyst and marketing roles. Are you a 0 to 1 builder passionate about the markets and AI? See the open roles here.