Generating cash is essential for any business, but not all cash-rich companies are great investments. Some produce plenty of cash but fail to allocate it effectively, leading to missed opportunities.
Luckily for you, we built StockStory to help you separate the good from the bad. That said, here is one cash-producing company that excels at turning cash into shareholder value and two that may struggle to keep up.
Two Stocks to Sell:
Global Industrial (GIC)
Trailing 12-Month Free Cash Flow Margin: 4.3%
Formerly known as Systemax, Global Industrial (NYSE: GIC) distributes industrial and commercial products to businesses and institutions.
Why Is GIC Risky?
- 6.9% annual revenue growth over the last two years was slower than its industrials peers
- Earnings per share fell by 2.3% annually over the last two years while its revenue grew, showing its incremental sales were much less profitable
- Waning returns on capital imply its previous profit engines are losing steam
At $34.99 per share, Global Industrial trades at 20.2x forward P/E. Read our free research report to see why you should think twice about including GIC in your portfolio.
Equifax (EFX)
Trailing 12-Month Free Cash Flow Margin: 15.7%
Holding detailed financial records on over 800 million consumers worldwide and dating back to 1899, Equifax (NYSE: EFX) is a global data analytics company that collects, analyzes, and sells consumer and business credit information to lenders, employers, and other businesses.
Why Are We Wary of EFX?
- Costs have risen faster than its revenue over the last five years, causing its adjusted operating margin to decline by 6.3 percentage points
- Incremental sales over the last five years were less profitable as its 4.5% annual earnings per share growth lagged its revenue gains
- Underwhelming 10.9% return on capital reflects management’s difficulties in finding profitable growth opportunities, and its shrinking returns suggest its past profit sources are losing steam
Equifax’s stock price of $247.58 implies a valuation ratio of 29.6x forward P/E. Check out our free in-depth research report to learn more about why EFX doesn’t pass our bar.
One Stock to Watch:
MACOM (MTSI)
Trailing 12-Month Free Cash Flow Margin: 22.1%
Founded in the 1950s as Microwave Associates, a communications supplier to the US Army Signal Corp, today MACOM Technology Solutions (NASDAQ: MTSI) is a provider of analog chips used in optical, wireless, and satellite networks.
Why Do We Like MTSI?
- Market share has increased this cycle as its 15.8% annual revenue growth over the last two years was exceptional
- Projected revenue growth of 18.7% for the next 12 months is above its two-year trend, pointing to accelerating demand
- Earnings per share grew by 41.3% annually over the last five years, massively outpacing its peers
MACOM is trading at $121 per share, or 31.4x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free.
Stocks We Like Even More
When Trump unveiled his aggressive tariff plan in April 2025, markets tanked as investors feared a full-blown trade war. But those who panicked and sold missed the subsequent rebound that’s already erased most losses.
Don’t let fear keep you from great opportunities and take a look at 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-micro-cap company Kadant (+351% 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
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