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.

Not all companies are created equal, and StockStory is here to surface the ones with real upside. Keeping that in mind, here is one cash-producing company that excels at turning cash into shareholder value and two that may face some trouble.

Two Stocks to Sell:

Roku (ROKU)

Trailing 12-Month Free Cash Flow Margin: 5.2%

Spun out from Netflix, Roku (NASDAQ: ROKU) makes hardware players that offer access to various online streaming TV services.

Why Does ROKU Give Us Pause?

1. Decision to emphasize platform growth over monetization has contributed to 2.4% annual declines in its average revenue per user

2. EBITDA margin declined by 10.5 percentage points over the last few years as it scaled

3. Earnings per share fell by 32.8% annually over the last three years while its revenue grew, showing its incremental sales were much less profitable

At $66 per share, Roku trades at 33x forward EV-to-EBITDA. To fully understand why you should be careful with ROKU, check out our full research report (it’s free) .

RTX (RTX)

Trailing 12-Month Free Cash Flow Margin: 6.7%

Originally focused on refrigeration technology, Raytheon (NSYE:RTX) provides a a variety of products and services to the aerospace and defense industries.

Why Is RTX Not Exciting?

1. Estimated sales growth of 4% for the next 12 months implies demand will slow from its two-year trend

2. Performance over the past five years was negatively impacted by new share issuances as its earnings per share were flat while its revenue grew

3. ROIC of 2.5% reflects management’s challenges in identifying attractive investment opportunities

RTX is trading at $125.46 per share, or 20x forward price-to-earnings. Dive into our free research report to see why there are better opportunities than RTX .

One Stock to Buy:

Ibotta (IBTA)

Trailing 12-Month Free Cash Flow Margin: 28.8%

Originally launched as a way to make grocery shopping more rewarding for budget-conscious consumers, Ibotta (NYSE:IBTA) is a mobile shopping app that allows consumers to earn cash back on everyday purchases by completing tasks and submitting receipts.

Why Is IBTA a Top Pick?

1. Market share has increased this cycle as its 32% annual revenue growth over the last two years was exceptional

2. Rapid growth in total redemptions demonstrates strong market adoption

3. Performance over the past two years shows its incremental sales were extremely profitable, as its annual earnings per share growth of 58.8% outpaced its revenue gains