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.
Not all companies are created equal, and StockStory is here to surface the ones with real upside. Keeping that in mind, 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:
Tennant (TNC)
Trailing 12-Month Free Cash Flow Margin: 4.8%
As the world’s largest manufacturer of autonomous mobile robots, Tennant (NYSE: TNC) designs, manufactures, and sells cleaning products to various sectors.
Why Is TNC Not Exciting?
- Muted 2.3% annual revenue growth over the last five years shows its demand lagged behind its industrials peers
- Sales are projected to tank by 1% over the next 12 months as demand evaporates
- Free cash flow margin shrank by 7.1 percentage points over the last five years, suggesting the company is consuming more capital to stay competitive
Tennant is trading at $70.78 per share, or 11.4x forward P/E. Dive into our free research report to see why there are better opportunities than TNC.
Stanley Black & Decker (SWK)
Trailing 12-Month Free Cash Flow Margin: 5%
With an iconic “STANLEY” logo which has remained virtually unchanged for over a century, Stanley Black & Decker (NYSE: SWK) is a manufacturer primarily catering to the tool and outdoor equipment industry.
Why Should You Dump SWK?
- Core business is underperforming as its organic revenue has disappointed over the past two years, suggesting it might need acquisitions to stimulate growth
- Incremental sales over the last five years were much less profitable as its earnings per share fell by 10.6% annually while its revenue grew
- 8.7 percentage point decline in its free cash flow margin over the last five years reflects the company’s increased investments to defend its market position
Stanley Black & Decker’s stock price of $58.91 implies a valuation ratio of 11x forward P/E. To fully understand why you should be careful with SWK, check out our full research report (it’s free).
One Stock to Watch:
Option Care Health (OPCH)
Trailing 12-Month Free Cash Flow Margin: 6.7%
With a nationwide network of 177 locations serving 43 states and a team of over 4,500 clinicians, Option Care Health (NASDAQ: OPCH) is the largest independent provider of home and alternate site infusion services, delivering medications and clinical support to patients across the United States.
Why Could OPCH Be a Winner?
- 15.3% annual revenue growth over the last five years surpassed the sector average as its offerings resonated with customers
- Share repurchases over the last five years enabled its annual earnings per share growth of 66.4% to outpace its revenue gains
- Free cash flow margin expanded by 3.3 percentage points over the last five years, providing additional flexibility for investments and share buybacks/dividends
At $33.44 per share, Option Care Health trades at 20.2x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free.
Stocks That Overcame Trump’s 2018 Tariffs
Market indices reached historic highs following Donald Trump’s presidential victory in November 2024, but the outlook for 2025 is clouded by new trade policies that could impact business confidence and growth.
While this has caused many investors to adopt a "fearful" wait-and-see approach, we’re leaning into our best ideas that can grow regardless of the political or macroeconomic climate. Take advantage of Mr. Market 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 175% over the last five years.
Stocks that made our list in 2019 include now familiar names such as Nvidia (+2,183% between December 2019 and December 2024) as well as under-the-radar businesses like Sterling Infrastructure (+1,096% five-year return). Find your next big winner with StockStory today for free.
