1 Cash-Producing Stock to Own for Decades and 2 Facing Challenges

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

Luckily for you, we built StockStory to help you separate the good from the bad. That said, 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:

Builders FirstSource (BLDR)

Trailing 12-Month Free Cash Flow Margin: 5.6%

Headquartered in Irving, TX, Builders FirstSource (NYSE:BLDR) is a construction materials manufacturer that offers a variety of lumber and lumber-related building products.

Why Do We Think BLDR Will Underperform?

1. Customers postponed purchases of its products and services this cycle as its revenue declined by 5.7% annually over the last two years
2. Performance over the past two years shows each sale was less profitable as its earnings per share dropped by 31.4% annually, worse than its revenue
3. Diminishing returns on capital suggest its earlier profit pools are drying up

Builders FirstSource is trading at $92 per share, or 16.2x forward P/E. To fully understand why you should be careful with BLDR, check out our full research report (it’s free).

Ball (BALL)

Trailing 12-Month Free Cash Flow Margin: 6%

Started with a $200 loan in 1880, Ball (NYSE:BLL) manufactures aluminum packaging for beverages, personal care, and household products as well as aerospace systems and other technologies.

Why Do We Avoid BALL?

1. Products and services are facing significant end-market challenges during this cycle as sales have declined by 3.1% annually over the last two years
2. Competitive supply chain dynamics and steep production costs are reflected in its low gross margin of 21.4%
3. Low free cash flow margin of -0.1% for the last five years gives it little breathing room, constraining its ability to self-fund growth or return capital to shareholders

At $62.47 per share, Ball trades at 15.9x forward P/E. If you’re considering BALL for your portfolio, see our FREE research report to learn more.

One Stock to Buy:

ServiceNow (NOW)

Trailing 12-Month Free Cash Flow Margin: 34.9%

Built on a single code base that processes over 4 billion workflow transactions daily, ServiceNow (NYSE:NOW) provides a cloud-based platform that helps organizations automate and digitize workflows across departments, from IT and HR to customer service and security.

Why Should You Buy NOW?

1. Customers view its software as mission-critical to their operations as its ARR has averaged 21% growth over the last year
2. Excellent operating margin of 13.7% highlights the efficiency of its business model, and its profits increased over the last year as it scaled
3. NOW is a free cash flow machine with the flexibility to invest in growth initiatives or return capital to shareholders

ServiceNow’s stock price of $124.12 implies a valuation ratio of 7.9x 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

WHILE YOU’RE HERE: Top 9 Market-Beating Stocks. The best stocks don't just beat the market once. They do it again. And again. Robust revenue growth, rising free cash flow, returns on capital that leave their competition in the dust. The market has already rewarded these businesses.

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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 Kadant (+351% five-year return). Find your next big winner with StockStory today.