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. Keeping that in mind, here is one cash-producing company that leverages its financial strength to beat its competitors and two best left off your watchlist.

Two Stocks to Sell:

Coty (COTY)

Trailing 12-Month Free Cash Flow Margin: 4.7%

With a portfolio boasting many household brands, Coty (NYSE: COTY) is a beauty products powerhouse spanning cosmetics, fragrances, and skincare.

Why Do We Think COTY Will Underperform?

1. Absence of organic revenue growth over the past one years suggests it may have to lean into acquisitions to drive its expansion
2. Sales are projected to remain flat over the next 12 months as demand decelerates from its three-year trend
3. Low returns on capital reflect management’s struggle to allocate funds effectively

Coty is trading at $4.30 per share, or 8.4x forward P/E. If you’re considering COTY for your portfolio, see our FREE research report to learn more.

Lincoln Electric (LECO)

Trailing 12-Month Free Cash Flow Margin: 12.4%

Headquartered in Ohio, Lincoln Electric (NASDAQ: LECO) manufactures and sells welding equipment for various industries.

Why Does LECO Fall Short?

1. Organic revenue growth fell short of our benchmarks over the past two years and implies it may need to improve its products, pricing, or go-to-market strategy
2. Projected sales growth of 6.4% for the next 12 months suggests sluggish demand
3. Earnings growth over the last two years fell short of the peer group average as its EPS only increased by 5.2% annually

Lincoln Electric’s stock price of $242.63 implies a valuation ratio of 24.9x forward P/E. To fully understand why you should be careful with LECO, check out our full research report (it’s free).

One Stock to Buy:

Magnite (MGNI)

Trailing 12-Month Free Cash Flow Margin: 26.6%

Born from the 2020 merger of Rubicon Project and Telaria, Magnite (NASDAQ: MGNI) operates the world's largest independent sell-side advertising platform that automates the buying and selling of digital advertising inventory across all channels and formats.

Why Is MGNI a Top Pick?

1. Annual revenue growth of 33% over the last five years was superb and indicates its market share increased during this cycle
2. Performance over the past two years shows its incremental sales were extremely profitable, as its annual earnings per share growth of 22.8% outpaced its revenue gains
3. Robust free cash flow margin of 23.3% gives it many options for capital deployment, and its recently improved profitability means it has even more resources to invest or distribute

At $26.30 per share, Magnite trades at 28.2x forward P/E. Is now a good time to buy? See for yourself in our comprehensive research report, it’s free.

Stocks We Like Even More

Trump’s April 2025 tariff bombshell triggered a massive market selloff, but stocks have since staged an impressive recovery, leaving those who panic sold on the sidelines.

Take advantage of the rebound 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 Exlservice (+354% 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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