While strong cash flow is a key indicator of stability, it doesn’t always translate to superior returns. Some cash-heavy businesses struggle with inefficient spending, slowing demand, or weak competitive positioning.

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.

Trailing 12-Month Free Cash Flow Margin: 6.8%

Founded by the former head of Google's enterprise business, Upstart (NASDAQ:UPST) is an AI-powered lending platform facilitating loans for banks and consumers.

Why Does UPST Give Us Pause?

Annual sales declines of 11.4% for the past three years show its products and services struggled to connect with the market

Customer acquisition costs take a while to recoup, making it difficult to justify sales and marketing investments that could increase revenue

High net-debt-to-EBITDA ratio of 8× increases the risk of forced asset sales or dilutive financing if operational performance weakens

Upstart’s stock price of $83.57 implies a valuation ratio of 7.3x forward price-to-sales. Read our free research report to see why you should think twice about including UPST in your portfolio, it’s free.

Trailing 12-Month Free Cash Flow Margin: 5.1%

Boasting partnerships with media franchises like Marvel and One Piece, Funko (NASDAQ:FNKO) is a company specializing in creating and distributing licensed pop culture collectibles.

Why Should You Sell FNKO?

Annual sales declines of 10% for the past two years show its products and services struggled to connect with the market

Incremental sales over the last five years were much less profitable as its earnings per share fell by 17.2% annually while its revenue grew

Waning returns on capital from an already weak starting point displays the inefficacy of management’s past and current investment decisions

At $4.41 per share, Funko trades at 20.8x forward P/E. If you’re considering FNKO for your portfolio, see our FREE research report to learn more.

Trailing 12-Month Free Cash Flow Margin: 4.5%

Founded to protect a tree-lined two-lane road, Montrose (NYSE:MEG) provides air quality monitoring, environmental laboratory testing, compliance, and environmental consulting services.

Why Could MEG Be a Winner?

Impressive 15.3% annual revenue growth over the last two years indicates it’s winning market share this cycle

Earnings growth has massively outpaced its peers over the last two years as its EPS has compounded at 146% annually

Free cash flow margin jumped by 6.9 percentage points over the last five years, giving the company more resources to pursue growth initiatives, repurchase shares, or pay dividends

Montrose is trading at $23.44 per share, or 9.2x forward EV-to-EBITDA. Is now the time to initiate a position? Find out in our full research report, it’s free.

Donald Trump’s April 2025 "Liberation Day" tariffs sent markets into a tailspin, but stocks have since rebounded strongly, proving that knee-jerk reactions often create the best buying opportunities.

The smart money is already positioning for the next leg up. Don’t miss out on the recovery - check out our Top 5 Growth Stocks for this month. 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.

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