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.
Luckily for you, we built StockStory to help you separate the good from the bad. That said, here is one cash-producing company that reinvests wisely to drive long-term success and two that may face some trouble.
Two Stocks to Sell:
Mister Car Wash (MCW)
Trailing 12-Month Free Cash Flow Margin: 2.6%
Formerly known as Hotshine Holdings, Mister Car Wash (NYSE: MCW) offers car washes across the United States through its conveyorized service.
Why Should You Sell MCW?
- Lagging same-store sales over the past two years suggest it might have to change its pricing and marketing strategy to stimulate demand
- Returns on capital are increasing as management makes relatively better investment decisions
- High net-debt-to-EBITDA ratio of 5× increases the risk of forced asset sales or dilutive financing if operational performance weakens
Mister Car Wash’s stock price of $5.90 implies a valuation ratio of 12.3x forward P/E. Dive into our free research report to see why there are better opportunities than MCW.
IMAX (IMAX)
Trailing 12-Month Free Cash Flow Margin: 16.8%
Originally developed for World Expo '67 in Montreal as an innovative projection system, IMAX (NYSE: IMAX) provides proprietary large-format cinema technology and systems that deliver immersive movie experiences with enhanced image quality and sound.
Why Does IMAX Fall Short?
- Customers postponed purchases of its products and services this cycle as its revenue declined by 1.2% annually over the last two years
- Smaller revenue base of $377.7 million means it hasn’t achieved the economies of scale that some industry juggernauts enjoy
- Underwhelming 1.8% return on capital reflects management’s difficulties in finding profitable growth opportunities
At $36.87 per share, IMAX trades at 23.9x forward P/E. Read our free research report to see why you should think twice about including IMAX in your portfolio.
One Stock to Watch:
Roku (ROKU)
Trailing 12-Month Free Cash Flow Margin: 9.9%
With a name meaning six in Japanese because it was the founder's sixth company that he started, Roku (NASDAQ: ROKU) makes hardware players that offer access to various online streaming TV services.
Why Is ROKU Interesting?
- Total Hours Streamed have increased by an average of 18.7% annually, giving it the potential for margin-accretive growth if it can develop valuable complementary products and features
- Incremental sales over the last three years have been highly profitable as its earnings per share increased by 51.2% annually, topping its revenue gains
- Free cash flow margin jumped by 14 percentage points over the last few years, giving the company more resources to pursue growth initiatives, repurchase shares, or pay dividends
Roku is trading at $104.67 per share, or 26.3x forward EV/EBITDA. Is now a good time to buy? Find out in our full research report, it’s free.
High-Quality Stocks for All Market Conditions
Check out the high-quality names we’ve flagged in our Top 5 Growth Stocks for this month. 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-micro-cap company Kadant (+351% five-year return). Find your next big winner with StockStory today.
