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.
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 best left off your watchlist.
Two Stocks to Sell:
McCormick (MKC)
Trailing 12-Month Free Cash Flow Margin: 9.7%
The classic red Heinz ketchup bottle’s competitor, McCormick (NYSE: MKC) sells food-flavoring products like condiments, spices, and seasoning mixes.
Why Is MKC Not Exciting?
- Muted 2.1% annual revenue growth over the last three years shows its demand lagged behind its consumer staples peers
- Absence of organic revenue growth over the past two years suggests it may have to lean into acquisitions to drive its expansion
- 1.9 percentage point decline in its free cash flow margin over the last year reflects the company’s increased investments to defend its market position
McCormick’s stock price of $65.13 implies a valuation ratio of 20.7x forward P/E. If you’re considering MKC for your portfolio, see our FREE research report to learn more.
Enovis (ENOV)
Trailing 12-Month Free Cash Flow Margin: 1%
With a focus on helping patients regain or maintain their natural motion, Enovis (NYSE: ENOV) develops and manufactures medical devices for orthopedic care, from injury prevention and pain management to joint replacement and rehabilitation.
Why Should You Sell ENOV?
- Annual sales declines of 6.5% for the past five years show its products and services struggled to connect with the market during this cycle
- Negative returns on capital show management lost money while trying to expand the business, and its shrinking returns suggest its past profit sources are losing steam
- Waning returns on capital from an already weak starting point displays the inefficacy of management’s past and current investment decisions
At $28.24 per share, Enovis trades at 8.7x forward P/E. Dive into our free research report to see why there are better opportunities than ENOV.
One Stock to Watch:
e.l.f. Beauty (ELF)
Trailing 12-Month Free Cash Flow Margin: 10.2%
Short for "eyes, lips, face", e.l.f. Beauty (NYSE: ELF) is a developer of high-quality beauty products at accessible price points.
Why Should ELF Be on Your Watchlist?
- Annual revenue growth of 45.7% over the past three years was outstanding, reflecting market share gains
- Earnings per share grew by 40.3% annually over the last three years and trumped its peers
- Free cash flow margin grew by 8.4 percentage points over the last year, giving the company more chips to play with
e.l.f. Beauty is trading at $73.04 per share, or 23.7x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free for active Edge members.
High-Quality Stocks for All Market Conditions
The market’s up big this year - but there’s a catch. Just 4 stocks account for half the S&P 500’s entire gain. That kind of concentration makes investors nervous, and for good reason. While everyone piles into the same crowded names, smart investors are hunting quality where no one’s looking - and paying a fraction of the price. Check out the high-quality names we’ve flagged in our Top 5 Strong Momentum Stocks for this week. 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 Tecnoglass (+1,754% 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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