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A company that generates cash isn’t automatically a winner. Some businesses stockpile cash but fail to reinvest wisely, limiting their ability to expand.

Not all companies are created equal, and StockStory is here to surface the ones with real upside. That said, here is one cash-producing company that reinvests wisely to drive long-term success and two that may struggle to keep up.

Two Stocks to Sell:

Electronic Arts (EA)

Trailing 12-Month Free Cash Flow Margin: 24.9%

Best known for its Madden NFL and FIFA sports franchises, Electronic Arts (NASDAQ:EA) is one of the world’s largest video game publishers.

Why Is EA Not Exciting?

1. Sales trends were unexciting over the last three years as its 2.1% annual growth was below the typical consumer internet company

2. Sales are projected to remain flat over the next 12 months as demand decelerates from its three-year trend

3. Efficiency has decreased over the last few years as its EBITDA margin fell by 8.1 percentage points

Electronic Arts’s stock price of $149.05 implies a valuation ratio of 14.9x forward EV/EBITDA. Dive into our free research report to see why there are better opportunities than EA.

Sonos (SONO)

Trailing 12-Month Free Cash Flow Margin: 4.4%

A pioneer in connected home audio systems, Sonos (NASDAQ:SONO) offers a range of premium wireless speakers and sound systems.

Why Do We Avoid SONO?

1. Annual revenue declines of 6.3% over the last two years indicate problems with its market positioning

2. Persistent operating losses suggest the business manages its expenses poorly

3. Negative returns on capital show that some of its growth strategies have backfired

Sonos is trading at $11.11 per share, or 53.6x forward P/E. Read our free research report to see why you should think twice about including SONO in your portfolio, it’s free.

One Stock to Watch:

Cardinal Health (CAH)

Trailing 12-Month Free Cash Flow Margin: 1.1%

Operating as a critical link in the healthcare supply chain since 1979, Cardinal Health (NYSE:CAH) distributes pharmaceuticals and manufactures medical products for hospitals, pharmacies, and healthcare providers across the global healthcare supply chain.

Why Do We Like CAH?

1. Dominant market position is represented by its $222.3 billion in revenue, which creates significant barriers to entry in this highly regulated industry

2. Demand will likely accelerate over the next 12 months as its forecasted revenue growth of 8.4% is above its two-year trend

3. Earnings per share grew by 7.7% annually over the last five years, above the peer group average

At $148.70 per share, Cardinal Health trades at 17x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free.