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 struggle to keep up.
Two Stocks to Sell:
Supernus Pharmaceuticals (SUPN)
Trailing 12-Month Free Cash Flow Margin: 27.9%
With a diverse portfolio of eight FDA-approved medications targeting neurological conditions, Supernus Pharmaceuticals (NASDAQ:SUPN) develops and markets treatments for central nervous system disorders including epilepsy, ADHD, Parkinson's disease, and migraine.
Why Are We Wary of SUPN?
- Muted 2.4% annual revenue growth over the last two years shows its demand lagged behind its healthcare peers
- Subscale operations are evident in its revenue base of $665.1 million, meaning it has fewer distribution channels than its larger rivals
- Eroding returns on capital from an already low base indicate that management’s recent investments are destroying value
Supernus Pharmaceuticals is trading at $45.43 per share, or 22.8x forward P/E. Read our free research report to see why you should think twice about including SUPN in your portfolio.
OPENLANE (KAR)
Trailing 12-Month Free Cash Flow Margin: 15.9%
Facilitating the sale of approximately 1.3 million used vehicles in 2023, OPENLANE (NYSE:KAR) operates digital marketplaces that connect sellers and buyers of used vehicles across North America and Europe, facilitating wholesale transactions.
Why Do We Think KAR Will Underperform?
- Sales tumbled by 5.3% annually over the last five years, showing market trends are working against its favor during this cycle
- Low returns on capital reflect management’s struggle to allocate funds effectively
- High net-debt-to-EBITDA ratio of 5× increases the risk of forced asset sales or dilutive financing if operational performance weakens
OPENLANE’s stock price of $29.15 implies a valuation ratio of 31.4x forward P/E. If you’re considering KAR for your portfolio, see our FREE research report to learn more.
One Stock to Watch:
Booking (BKNG)
Trailing 12-Month Free Cash Flow Margin: 36.9%
Formerly known as The Priceline Group, Booking Holdings (NASDAQ:BKNG) is the world’s largest online travel agency.
Why Do We Like BKNG?
- Room Nights Booked have grown by 9.5% annually, allowing for more profitable cross-selling opportunities if it can build complementary products and features
- Performance over the past three years was turbocharged by share buybacks, which enabled its earnings per share to grow faster than its revenue
- BKNG is a free cash flow machine with the flexibility to invest in growth initiatives or return capital to shareholders
At $5,590 per share, Booking trades at 18.7x forward EV/EBITDA. Is now the time to initiate a position? See for yourself in our comprehensive research report, it’s free.
Stocks We Like Even More
When Trump unveiled his aggressive tariff plan in April 2025, markets tanked as investors feared a full-blown trade war. But those who panicked and sold missed the subsequent rebound that’s already erased most losses.
Don’t let fear keep you from great opportunities and take a look at 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. Find your next big winner with StockStory today. Find your next big winner with StockStory today
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