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1 Cash-Producing Stock to Target This Week and 2 to Brush Off

HOOD Cover Image

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.

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 that may face some trouble.

Two Stocks to Sell:

Teradyne (TER)

Trailing 12-Month Free Cash Flow Margin: 20.9%

Sporting most major chip manufacturers as its customers, Teradyne (NASDAQ: TER) is a US-based supplier of automated test equipment for semiconductors as well as other technologies and devices.

Why Is TER Not Exciting?

  1. Annual revenue growth of 3% over the last five years was below our standards for the semiconductor sector
  2. Anticipated sales growth of 2.4% for the next year implies demand will be shaky
  3. Efficiency has decreased over the last five years as its operating margin fell by 7.9 percentage points

Teradyne is trading at $91.44 per share, or 25.2x forward P/E. If you’re considering TER for your portfolio, see our FREE research report to learn more.

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 Are We Hesitant About TNC?

  1. 2.3% annual revenue growth over the last five years was slower than its industrials peers
  2. Sales are projected to tank by 1% over the next 12 months as demand evaporates
  3. 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’s stock price of $77.61 implies a valuation ratio of 12.5x forward P/E. Check out our free in-depth research report to learn more about why TNC doesn’t pass our bar.

One Stock to Buy:

Robinhood (HOOD)

Trailing 12-Month Free Cash Flow Margin: 32.4%

With a mission to democratize finance, Robinhood (NASDAQ: HOOD) is an online consumer finance platform known for its commission-free stock and crypto trading.

Why Should You Buy HOOD?

  1. 43.1% annual increases in its average revenue per user over the last two years show its platform is resonating with power users
  2. Incremental sales over the last three years have been highly profitable as its earnings per share increased by 64.6% annually, topping its revenue gains
  3. Free cash flow margin jumped by 1,103.9 percentage points over the last few years, giving the company more resources to pursue growth initiatives, repurchase shares, or pay dividends

At $84.64 per share, Robinhood trades at 38.4x forward EV/EBITDA. Is now the right time to buy? See for yourself in our in-depth research report, it’s free.

High-Quality Stocks for All Market Conditions

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 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

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