A company that generates cash isn’t automatically a winner. Some businesses stockpile cash but fail to reinvest wisely, limiting their ability to expand.
Cash flow is valuable, but it’s not everything - StockStory helps you identify the companies that truly put it to work. That said, here is one cash-producing company that leverages its financial strength to beat its competitors and two best left off your watchlist.
Two Stocks to Sell:
Sensata Technologies (ST)
Trailing 12-Month Free Cash Flow Margin: 12.9%
Originally a temperature sensor control maker and a subsidiary of Texas Instruments for 60 years, Sensata Technology Holdings (NYSE: ST) is a leading supplier of analog sensors used in industrial and transportation applications, best known for its dominant position in the tire pressure monitoring systems in cars.
Why Should You Sell ST?
- Products and services are facing significant end-market challenges during this cycle as sales have declined by 4.8% annually over the last two years
- Competitive supply chain dynamics and steep production costs are reflected in its low gross margin of 30.2%
- ROIC of 5.3% reflects management’s challenges in identifying attractive investment opportunities, and its shrinking returns suggest its past profit sources are losing steam
Sensata Technologies is trading at $30.70 per share, or 8.6x forward P/E. Check out our free in-depth research report to learn more about why ST doesn’t pass our bar.
AT&T (T)
Trailing 12-Month Free Cash Flow Margin: 16%
Founded by Alexander Graham Bell, AT&T (NYSE: T) is a multinational telecomm conglomerate providing a range of communications and internet services.
Why Is T Risky?
- Products and services have few die-hard fans as sales have declined by 5.6% annually over the last five years
- Performance over the past five years shows each sale was less profitable as its earnings per share dropped by 8.5% annually, worse than its revenue
- Underwhelming 3.5% return on capital reflects management’s difficulties in finding profitable growth opportunities
At $24.78 per share, AT&T trades at 11.4x forward P/E. To fully understand why you should be careful with T, check out our full research report (it’s free for active Edge members).
One Stock to Watch:
Incyte (INCY)
Trailing 12-Month Free Cash Flow Margin: 24.2%
Founded in 1991 and evolving from a genomics research firm to a commercial-stage drug developer, Incyte (NASDAQ: INCY) is a biopharmaceutical company that discovers, develops, and commercializes proprietary therapeutics for cancer and inflammatory diseases.
Why Does INCY Stand Out?
- Offerings and unique value proposition resonate with customers, as seen in its above-market 15.5% annual sales growth over the last two years
- Share buybacks catapulted its annual earnings per share growth to 60.8%, which outperformed its revenue gains over the last five years
- Free cash flow margin grew by 5.5 percentage points over the last five years, giving the company more chips to play with
Incyte’s stock price of $105.50 implies a valuation ratio of 13.9x forward P/E. Is now a good time to buy? See for yourself in our in-depth research report, it’s free for active Edge members.
High-Quality Stocks for All Market Conditions
Trump’s April 2025 tariff bombshell triggered a massive market selloff, but stocks have since staged an impressive recovery, leaving those who panic sold on the sidelines.
Take advantage of the rebound by checking out our Top 6 Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 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
StockStory is growing and hiring equity analyst and marketing roles. Are you a 0 to 1 builder passionate about the markets and AI? See the open roles here.
