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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 leverages its financial strength to beat its competitors and two that may face some trouble.

Two Stocks to Sell:

LiveRamp (RAMP)

Trailing 12-Month Free Cash Flow Margin: 15.9%

Started in 2011 as a spin-out of RapLeaf, LiveRamp (NYSE:RAMP) is a software-as-a-service provider that helps companies better target their marketing by merging offline and online data about their customers.

Why Are We Hesitant About RAMP?

1. 12.9% annual revenue growth over the last three years was slower than its software peers

2. Estimated sales growth of 7.1% for the next 12 months implies demand will slow from its three-year trend

LiveRamp is trading at $26.86 per share, or 2.3x forward price-to-sales. Check out our free in-depth research report to learn more about why RAMP doesn’t pass our bar.

Mondelez (MDLZ)

Trailing 12-Month Free Cash Flow Margin: 9.1%

Founded as Nabisco in 1903, Mondelez (NASDAQ:MDLZ) is a packaged snacks powerhouse best known for its Oreo, Cadbury, Toblerone, Ritz, and Trident brands.

Why Are We Cautious About MDLZ?

1. Costs have risen faster than its revenue over the last year, causing its operating margin to decline by 7 percentage points

2. Capital intensity has ramped up over the last year as its free cash flow margin decreased by 1.3 percentage points

3. Below-average returns on capital indicate management struggled to find compelling investment opportunities

Mondelez’s stock price of $67.80 implies a valuation ratio of 22.5x forward P/E. Dive into our free research report to see why there are better opportunities than MDLZ.

One Stock to Watch:

Transcat (TRNS)

Trailing 12-Month Free Cash Flow Margin: 7.1%

Serving the pharmaceutical, industrial manufacturing, energy, and chemical process industries, Transcat (NASDAQ:TRNS) provides measurement instruments and supplies.

Why Do We Watch TRNS?

1. 10.1% annual revenue growth over the last two years surpassed the sector average as its offerings resonated with customers

2. Forecasted revenue growth of 10.6% for the next 12 months indicates its momentum over the last two years is sustainable

3. Earnings per share have massively outperformed its peers over the last five years, increasing by 17.1% annually

At $79.64 per share, Transcat trades at 31.2x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free.