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. That said, here is one cash-producing company that leverages its financial strength to beat its competitors and two best left off your watchlist.

Two Stocks to Sell:

Williams-Sonoma (WSM)

Trailing 12-Month Free Cash Flow Margin: 12.7%

Started in 1956 as a store specializing in French cookware, Williams-Sonoma (NYSE:WSM) is a specialty retailer of higher-end kitchenware, home goods, and furniture.

Why Do We Think Twice About WSM?

1. Recent store closures and weak same-store sales point to soft demand and an operational restructuring
2. Weak same-store sales trends over the past two years suggest there may be few opportunities in its core markets to open new locations
3. Free cash flow margin shrank by 5.3 percentage points over the last year, suggesting the company is consuming more capital to stay competitive

At $158.50 per share, Williams-Sonoma trades at 18.5x forward P/E. Read our free research report to see why you should think twice about including WSM in your portfolio, it’s free.

MRC Global (MRC)

Trailing 12-Month Free Cash Flow Margin: 7.4%

Producing bomb casings and tracks for vehicles during WWII, MRC (NYSE:MRC) offers pipes, valves, and fitting products for various industries.

Why Are We Out on MRC?

1. Products and services are facing significant end-market challenges during this cycle as sales have declined by 2.9% annually over the last five years
2. Earnings per share have contracted by 33.4% annually over the last two years, a headwind for returns as stock prices often echo long-term EPS performance
3. Low returns on capital reflect management’s struggle to allocate funds effectively

MRC Global is trading at $12.05 per share, or 10.3x forward P/E. To fully understand why you should be careful with MRC, check out our full research report (it’s free).

One Stock to Watch:

Atlassian (TEAM)

Trailing 12-Month Free Cash Flow Margin: 29.6%

Founded by Australian co-CEOs Mike Cannon-Brookes and Scott Farquhar in 2002, Atlassian (NASDAQ:TEAM) provides software as a service that makes it easier for large teams of software developers to manage projects, especially in software development.

Why Does TEAM Stand Out?

1. Billings have averaged 14.7% growth over the last year, showing it’s securing new contracts that could potentially increase in value over time
2. Fast payback periods on sales and marketing expenses allow the company to invest heavily and onboard many customers concurrently
3. Impressive free cash flow profitability enables the company to fund new investments or reward investors with share buybacks/dividends

Atlassian’s stock price of $205.02 implies a valuation ratio of 9.2x forward price-to-sales. Is now a good time to buy? See for yourself in our in-depth research report, it’s free.

Stocks We Like Even More

The market surged in 2024 and reached record highs after Donald Trump’s presidential victory in November, but questions about new economic policies are adding much uncertainty for 2025.

While the crowd speculates what might happen next, we’re homing in on the companies that can succeed regardless of the political or macroeconomic environment. Put yourself in the driver’s seat and build a durable portfolio 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-micro-cap company Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today for free.