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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.

Luckily for you, we built StockStory to help you separate the good from the bad. Keeping that in mind, here is one cash-producing company that excels at turning cash into shareholder value and two best left off your watchlist.

Two Stocks to Sell:

Simply Good Foods (SMPL)

Trailing 12-Month Free Cash Flow Margin: 12.7%

Best known for its Atkins brand that was inspired by the popular diet of the same name, Simply Good Foods (NASDAQ:SMPL) is a packaged food company whose offerings help customers achieve their healthy eating or weight loss goals.

Why Is SMPL Not Exciting?

1. Revenue base of $1.41 billion puts it at a disadvantage compared to larger competitors exhibiting economies of scale

2. Capital intensity has ramped up over the last year as its free cash flow margin decreased by 3.1 percentage points

3. Underwhelming 8% return on capital reflects management’s difficulties in finding profitable growth opportunities

At $36.11 per share, Simply Good Foods trades at 18.1x forward price-to-earnings. To fully understand why you should be careful with SMPL, check out our full research report (it’s free).

AECOM (ACM)

Trailing 12-Month Free Cash Flow Margin: 4.5%

Founded in 1990 when a group of engineers from five companies decided to merge, AECOM (NYSE:ACM) provides various infrastructure consulting services.

Why Does ACM Give Us Pause?

1. Flat backlog over the past two years has disappointed and shows fewer customers signed long-term contracts

2. Gross margin of 6.3% is below its competitors, leaving less money to invest in areas like marketing and R&D

3. Subpar operating margin of 4.2% constrains its ability to invest in process improvements or effectively respond to new competitive threats

AECOM is trading at $99.98 per share, or 19.1x forward price-to-earnings. If you’re considering ACM for your portfolio, see our FREE research report to learn more.

One Stock to Watch:

Dutch Bros (BROS)

Trailing 12-Month Free Cash Flow Margin: 1.9%

Started in 1992 by two brothers as a single pushcart, Dutch Bros (NYSE:BROS) is a dynamic coffee chain that’s captured the hearts of coffee enthusiasts across the United States.

Why Is BROS on Our Radar?

1. Fast expansion of new restaurants to reach markets with few or no locations is justified by its same-store sales growth

2. Same-store sales growth averaged 4.3% over the past two years, showing it’s bringing new and repeat diners into its restaurants

3. Operating profits increased over the last year as the company gained some leverage on its fixed costs and became more efficient