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. That said, 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:

ON24 (ONTF)

Trailing 12-Month Free Cash Flow Margin: 1.7%

Started in 1998 as a platform to broadcast press conferences, ON24’s (NYSE:ONTF) software helps organizations organize online webinars and other virtual events and convert prospects into customers.

Why Should You Sell ONTF?

1. Products, pricing, or go-to-market strategy need some adjustments as its billings have averaged 8.1% declines over the last year
2. Customers have churned over the last year due to the commoditized nature of its software, as reflected in its 91% net revenue retention rate
3. Customer acquisition costs take a while to recoup, making it difficult to justify sales and marketing investments that could increase revenue

ON24’s stock price of $5 implies a valuation ratio of 1.4x forward price-to-sales. To fully understand why you should be careful with ONTF, check out our full research report (it’s free).

Teleflex (TFX)

Trailing 12-Month Free Cash Flow Margin: 16.7%

With a portfolio spanning from vascular access catheters to minimally invasive surgical tools, Teleflex (NYSE:TFX) designs, manufactures, and supplies single-use medical devices used in critical care and surgical procedures across hospitals worldwide.

Why Does TFX Fall Short?

1. Weak constant currency growth over the past two years indicates challenges in maintaining its market share
2. Demand is forecasted to shrink as its estimated sales for the next 12 months are flat
3. Eroding returns on capital from an already low base indicate that management’s recent investments are destroying value

At $135.49 per share, Teleflex trades at 8.9x forward price-to-earnings. Check out our free in-depth research report to learn more about why TFX doesn’t pass our bar.

One Stock to Watch:

Colgate-Palmolive (CL)

Trailing 12-Month Free Cash Flow Margin: 17.4%

Formed after the 1928 combination between toothpaste maker Colgate and soap maker Palmolive-Peet, Colgate-Palmolive (NYSE:CL) is a consumer products company that focuses on personal, household, and pet products.

Why Do We Watch CL?

1. Large revenue base of $19.95 billion and strong customer awareness make retailers more likely to stock its products
2. Impressive free cash flow profitability enables the company to fund new investments or reward investors with share buybacks/dividends, and its rising cash conversion increases its margin of safety
3. Market-beating returns on capital illustrate that management has a knack for investing in profitable ventures, and its rising returns show it’s making even more lucrative bets

Colgate-Palmolive is trading at $94.08 per share, or 25x forward price-to-earnings. Is now the right time to buy? Find out in our full research report, it’s free.

Stocks We Like Even More

Market indices reached historic highs following Donald Trump’s presidential victory in November 2024, but the outlook for 2025 is clouded by new trade policies that could impact business confidence and growth.

While this has caused many investors to adopt a "fearful" wait-and-see approach, we’re leaning into our best ideas that can grow regardless of the political or macroeconomic climate. Take advantage of Mr. Market 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 175% over the last five years.

Stocks that made our list in 2019 include now familiar names such as Nvidia (+2,183% between December 2019 and December 2024) as well as under-the-radar businesses like Axon (+711% five-year return). Find your next big winner with StockStory today for free.