A company that generates cash isn’t automatically a winner. Some businesses stockpile cash but fail to reinvest wisely, limiting their ability to expand.

Not all companies are created equal, and StockStory is here to surface the ones with real upside. That said, here is one cash-producing company that excels at turning cash into shareholder value and two best left off your watchlist.

Two Industrials Stocks to Sell:

GMS (GMS)

Trailing 12-Month Free Cash Flow Margin: 6.1%

Founded in 1971, GMS (NYSE: GMS) distributes specialty building materials including wallboard, ceilings, and insulation products, to the construction industry.

Why Does GMS Worry Us?

1. Organic sales performance over the past two years indicates the company may need to make strategic adjustments or rely on M&A to catalyze faster growth
2. Projected sales decline of 3.7% for the next 12 months points to a tough demand environment ahead
3. Falling earnings per share over the last two years has some investors worried as stock prices ultimately follow EPS over the long term

GMS’s stock price of $77.20 implies a valuation ratio of 9.9x forward P/E. To fully understand why you should be careful with GMS, check out our full research report (it’s free).

Leidos (LDOS)

Trailing 12-Month Free Cash Flow Margin: 7.3%

Formed through the split of IT services company SAIC, Leidos (NYSE: LDOS) offers technology and engineering solutions such as military training systems for the defense, civil, and health markets.

Why Are We Cautious About LDOS?

1. Estimated sales growth of 2.4% for the next 12 months implies demand will slow from its two-year trend
2. Free cash flow margin has stayed in place over the last five years

Leidos is trading at $156.09 per share, or 14.3x forward P/E. Check out our free in-depth research report to learn more about why LDOS doesn’t pass our bar.

One Industrials Stock to Buy:

Badger Meter (BMI)

Trailing 12-Month Free Cash Flow Margin: 18%

The developer of the world’s first frost-proof water meter in 1905, Badger Meter (NYSE: BMI) provides water control and measure equipment to various industries.

Why Should You Buy BMI?

1. Market share has increased this cycle as its 20% annual revenue growth over the last two years was exceptional
2. Earnings growth has trumped its peers over the last two years as its EPS has compounded at 36.6% annually
3. BMI is a free cash flow machine with the flexibility to invest in growth initiatives or return capital to shareholders

At $235.45 per share, Badger Meter trades at 50.2x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free.

Stocks We Like Even More

Donald Trump’s victory in the 2024 U.S. Presidential Election sent major indices to all-time highs, but stocks have retraced as investors debate the health of the economy and the potential impact of tariffs.

While this leaves much uncertainty around 2025, a few companies are poised for long-term gains regardless of the political or macroeconomic climate, like our Top 9 Market-Beating Stocks. This is a curated list of our High Quality stocks that have generated a market-beating return of 176% over the last five years.

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-micro-cap company Kadant (+351% five-year return). Find your next big winner with StockStory today for free.