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. Keeping that in mind, here is one cash-producing company that leverages its financial strength to beat its competitors and two that may face some trouble.

Two Stocks to Sell:

Target Hospitality (TH)

Trailing 12-Month Free Cash Flow Margin: 3.6%

Building mini-communities at places such as oil drilling sites, Target Hospitality (NASDAQ: TH) is a provider of specialty workforce lodging accommodations and services.

Why Should You Sell TH?

1. Performance surrounding its utilized beds has lagged its peers
2. Ability to fund investments or reward shareholders with increased buybacks or dividends is restricted by its weak free cash flow margin of 7.7% for the last two years
3. Diminishing returns on capital from an already low starting point show that neither management’s prior nor current bets are going as planned

Target Hospitality is trading at $17.47 per share, or 111.9x forward P/E. Check out our free in-depth research report to learn more about why TH doesn’t pass our bar.

Barrett (BBSI)

Trailing 12-Month Free Cash Flow Margin: 1.2%

Operating as a professional employer organization (PEO) that serves over 8,000 companies with more than 120,000 worksite employees, Barrett Business Services (NASDAQ: BBSI) provides management solutions that help small and mid-sized businesses handle human resources, payroll, workers' compensation, and other administrative functions.

Why Do We Think Twice About BBSI?

1. Flat earnings per share over the last two years underperformed the sector average
2. Low free cash flow margin of 0% for the last five years gives it little breathing room, constraining its ability to self-fund growth or return capital to shareholders
3. Diminishing returns on capital suggest its earlier profit pools are drying up

Barrett’s stock price of $32.94 implies a valuation ratio of 0.6x forward price-to-sales. To fully understand why you should be careful with BBSI, check out our full research report (it’s free).

One Stock to Buy:

Hewlett Packard Enterprise (HPE)

Trailing 12-Month Free Cash Flow Margin: 11.3%

Born from the 2015 split of the iconic Silicon Valley pioneer Hewlett-Packard, Hewlett Packard Enterprise (NYSE: HPE) provides edge-to-cloud technology solutions that help businesses capture, analyze, and act upon their data across hybrid IT environments.

Why Should You Buy HPE?

1. Offerings are pivotal for their customers’ operations as its ARR has averaged 50.7% growth over the past two years
2. Enormous revenue base of $38.79 billion provides significant distribution advantages
3. Demand for the next 12 months is expected to accelerate above its two-year trend as Wall Street forecasts robust revenue growth of 26.2%

At $54.53 per share, Hewlett Packard Enterprise trades at 14.9x forward P/E. Is now a good time to buy? See for yourself in our comprehensive research report, it’s free.

High-Quality Stocks for All Market Conditions

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Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Exlservice (+271% between June 2020 and June 2025). Find your next big winner with StockStory today.