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.

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 best left off your watchlist.

Two Stocks to Sell:

RTX (RTX)

Trailing 12-Month Free Cash Flow Margin: 6.7%

Originally focused on refrigeration technology, Raytheon (NSYE:RTX) provides a a variety of products and services to the aerospace and defense industries.

Why Does RTX Worry Us?

1. Annual sales growth of 6.3% over the last five years lagged behind its industrials peers as its large revenue base made it difficult to generate incremental demand
2. Earnings per share were flat while its revenue grew over the last five years, partly because it issued new shares
3. Below-average returns on capital indicate management struggled to find compelling investment opportunities

At $150.39 per share, RTX trades at 23.9x forward P/E. If you’re considering RTX for your portfolio, see our FREE research report to learn more.

Connection (CNXN)

Trailing 12-Month Free Cash Flow Margin: 2%

Starting as a small computer products seller in 1982 and evolving into a Fortune 1000 company, Connection (NASDAQ: CNXN) is a technology solutions provider that helps businesses and government agencies design, purchase, implement, and manage their IT infrastructure and systems.

Why Should You Sell CNXN?

1. Products and services are facing end-market challenges during this cycle, as seen in its flat sales over the last five years
2. Flat earnings per share over the last five years lagged its peers
3. Lacking free cash flow generation means it has few chances to reinvest for growth, repurchase shares, or distribute capital

Connection’s stock price of $65.27 implies a valuation ratio of 18.7x forward P/E. To fully understand why you should be careful with CNXN, check out our full research report (it’s free).

One Stock to Watch:

Zoetis (ZTS)

Trailing 12-Month Free Cash Flow Margin: 24.6%

Originally spun off from Pfizer in 2013 as the world's largest pure-play animal health company, Zoetis (NYSE: ZTS) discovers, develops, and sells medicines, vaccines, diagnostic products, and services for pets and livestock animals worldwide.

Why Is ZTS Interesting?

1. Steady constant currency growth over the past two years shows the company can pursue its global ambitions, even in uncertain economic times
2. Robust free cash flow margin of 21.4% gives it many options for capital deployment
3. Market-beating returns on capital illustrate that management has a knack for investing in profitable ventures

Zoetis is trading at $152.50 per share, or 24.5x forward P/E. Is now the time to initiate a position? 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 Strong Momentum 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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