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 excels at turning cash into shareholder value and two that may face some trouble.
Two Stocks to Sell:
Chegg (CHGG)
Trailing 12-Month Free Cash Flow Margin: 1.7%
Started as a physical textbook rental service, Chegg (NYSE: CHGG) is now a digital platform addressing student pain points by providing study and academic assistance.
Why Is CHGG Risky?
- Value proposition isn’t resonating strongly as its services subscribers averaged 21.7% drops over the last two years
- EBITDA margin declined by 13 percentage points over the last few years as its sales cratered
- Sales were less profitable over the last three years as its earnings per share fell by 45.3% annually, worse than its revenue declines
Chegg’s stock price of $0.90 implies a valuation ratio of 2.2x forward EV/EBITDA. Read our free research report to see why you should think twice about including CHGG in your portfolio.
Harley-Davidson (HOG)
Trailing 12-Month Free Cash Flow Margin: 8.4%
Founded in 1903, Harley-Davidson (NYSE: HOG) is an American motorcycle manufacturer known for its heavyweight motorcycles designed for cruising on highways.
Why Should You Sell HOG?
- Number of motorcycles sold has disappointed over the past two years, indicating weak demand for its offerings
- Diminishing returns on capital from an already low starting point show that neither management’s prior nor current bets are going as planned
- 8× net-debt-to-EBITDA ratio shows it’s overleveraged and increases the probability of shareholder dilution if things turn unexpectedly
Harley-Davidson is trading at $24.18 per share, or 17.1x forward P/E. To fully understand why you should be careful with HOG, check out our full research report (it’s free for active Edge members).
One Stock to Buy:
Nextracker (NXT)
Trailing 12-Month Free Cash Flow Margin: 17.9%
With its technology playing a key role in the massive 1.2 gigawatt Noor Abu Dhabi solar farm project, Nextracker (NASDAQ: NXT) is a provider of solar tracker systems that help solar panels follow the sun.
Why Do We Love NXT?
- Sales pipeline is in good shape as its backlog averaged 56.9% growth over the past two years
- Free cash flow margin expanded by 15.6 percentage points over the last five years, providing additional flexibility for investments and share buybacks/dividends
- Returns on capital are growing as management capitalizes on its market opportunities
At $87.64 per share, Nextracker trades at 21.9x forward P/E. Is now the time to initiate a position? See for yourself in our comprehensive research report, it’s free for active Edge members .
Stocks We Like Even More
If your portfolio success hinges on just 4 stocks, your wealth is built on fragile ground. You have a small window to secure high-quality assets before the market widens and these prices disappear.
Don’t wait for the next volatility shock. Check out our Top 9 Market-Beating Stocks. This is a curated list of our High Quality stocks that have generated a market-beating return of 244% over the last five years (as of June 30, 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,326% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Comfort Systems (+782% 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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