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. That said, here are two cash-producing companies that excel at turning cash into shareholder value and one best left off your watchlist.

One Stock to Sell:

Wynn Resorts (WYNN)

Trailing 12-Month Free Cash Flow Margin: 11%

Founded by the former Mirage Resorts CEO, Wynn Resorts (NASDAQ: WYNN) is a global developer and operator of high-end hotels and casinos, known for its luxurious properties and premium guest services.

Why Are We Wary of WYNN?

1. Sales trends were unexciting over the last five years as its 3.3% annual growth was below the typical consumer discretionary company
2. ROIC of 1.9% reflects management’s challenges in identifying attractive investment opportunities
3. 5× net-debt-to-EBITDA ratio makes lenders less willing to extend additional capital, potentially necessitating dilutive equity offerings

At $86.52 per share, Wynn Resorts trades at 17.7x forward P/E. To fully understand why you should be careful with WYNN, check out our full research report (it’s free).

Two Stocks to Buy:

Nova (NVMI)

Trailing 12-Month Free Cash Flow Margin: 29.7%

Headquartered in Israel, Nova (NASDAQ: NVMI) is a provider of quality control systems used in semiconductor manufacturing.

Why Will NVMI Outperform?

1. Annual revenue growth of 14.3% over the past two years was outstanding, reflecting market share gains this cycle
2. NVMI is a free cash flow machine with the flexibility to invest in growth initiatives or return capital to shareholders, and its improved cash conversion implies it’s becoming a less capital-intensive business
3. Market-beating returns on capital illustrate that management has a knack for investing in profitable ventures

Nova’s stock price of $227.60 implies a valuation ratio of 27.4x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free.

Construction Partners (ROAD)

Trailing 12-Month Free Cash Flow Margin: 6.5%

Founded in 2001, Construction Partners (NASDAQ: ROAD) is a civil infrastructure company that builds and maintains roads, highways, and other infrastructure projects.

Why Are We Bullish on ROAD?

1. Market share is on track to rise over the next 12 months as its 40.5% projected revenue growth implies demand will accelerate from its two-year trend
2. Earnings per share have massively outperformed its peers over the last two years, increasing by 91% annually
3. Rising returns on capital show the company is starting to reap the benefits of its past investments

Construction Partners is trading at $103 per share, or 43.5x forward P/E. Is now the right time to buy? See for yourself in our comprehensive research report, it’s free.

Stocks We Like Even More

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 5 Growth Stocks for this month. 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.