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 excels at turning cash into shareholder value and two that may struggle to keep up.

Two Stocks to Sell:

Concentrix (CNXC)

Trailing 12-Month Free Cash Flow Margin: 5%

With a team of approximately 450,000 employees across 75 countries, Concentrix (NASDAQ:CNXC) designs and delivers customer experience solutions that help global brands manage their customer interactions across digital channels and contact centers.

Why Is CNXC Not Exciting?

1. Demand is forecasted to shrink as its estimated sales for the next 12 months are flat

2. Performance over the past two years shows its incremental sales were less profitable, as its 2.5% annual earnings per share growth trailed its revenue gains

3. Low returns on capital reflect management’s struggle to allocate funds effectively, and its shrinking returns suggest its past profit sources are losing steam

At $49.77 per share, Concentrix trades at 4.1x forward price-to-earnings. Read our free research report to see why you should think twice about including CNXC in your portfolio, it’s free .

Omnicom Group (OMC)

Trailing 12-Month Free Cash Flow Margin: 9%

With a vast network of creative agencies that helped craft some of the most memorable ad campaigns in history, Omnicom Group (NYSE:OMC) is a strategic holding company that provides advertising, marketing, and communications services to many of the world's largest companies.

Why Are We Cautious About OMC?

1. Absence of organic revenue growth over the past two years suggests it may have to lean into acquisitions to drive its expansion

2. Estimated sales growth of 1.9% for the next 12 months implies demand will slow from its two-year trend

3. Free cash flow margin shrank by 7.6 percentage points over the last five years, suggesting the company is consuming more capital to stay competitive

Omnicom Group’s stock price of $73.52 implies a valuation ratio of 8.6x forward price-to-earnings. Dive into our free research report to see why there are better opportunities than OMC .

One Stock to Watch:

MACOM (MTSI)

Trailing 12-Month Free Cash Flow Margin: 21.9%

Founded in the 1950s as Microwave Associates, a communications supplier to the US Army Signal Corp, today MACOM Technology Solutions (NASDAQ: MTSI) is a provider of analog chips used in optical, wireless, and satellite networks.