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. Keeping that in mind, here is one cash-producing company that reinvests wisely to drive long-term success and two that may struggle to keep up.

Two Stocks to Sell:

Littelfuse (LFUS)

Trailing 12-Month Free Cash Flow Margin: 13.3%

The developer of the first blade-type automotive fuse, Littelfuse (NASDAQ: LFUS) provides electrical protection and control components for the automotive, industrial, electronics, and telecommunications industries.

Why Do We Avoid LFUS?

1. Customers postponed purchases of its products and services this cycle as its revenue declined by 6% annually over the last two years
2. Sales were less profitable over the last two years as its earnings per share fell by 24.2% annually, worse than its revenue declines
3. Shrinking returns on capital suggest that increasing competition is eating into the company’s profitability

At $232.48 per share, Littelfuse trades at 23.8x forward P/E. Dive into our free research report to see why there are better opportunities than LFUS.

MasTec (MTZ)

Trailing 12-Month Free Cash Flow Margin: 7.4%

Involved in the 1996 Olympic Games MasTec (NYSE: MTZ) is an infrastructure construction company that specializes in the telecommunications, energy, and utility industries.

Why Are We Cautious About MTZ?

1. Gross margin of 13.2% is below its competitors, leaving less money to invest in areas like marketing and R&D
2. Incremental sales over the last five years were less profitable as its earnings per share were flat while its revenue grew
3. Capital intensity has ramped up over the last five years as its free cash flow margin decreased by 4.4 percentage points

MasTec is trading at $178.99 per share, or 31.1x forward P/E. If you’re considering MTZ for your portfolio, see our FREE research report to learn more.

One Stock to Watch:

Doximity (DOCS)

Trailing 12-Month Free Cash Flow Margin: 46.8%

Founded in 2010 and named for a combination of “docs” and “proximity”, Doximity (NYSE: DOCS) is the leading social network for U.S. medical professionals.

Why Should DOCS Be on Your Watchlist?

1. Billings have averaged 23.5% growth over the last year, showing it’s securing new contracts that could potentially increase in value over time
2. Software platform has product-market fit given the rapid recovery of its customer acquisition costs
3. Robust free cash flow margin of 46.8% gives it many options for capital deployment

Doximity’s stock price of $60.97 implies a valuation ratio of 19.8x forward price-to-sales. Is now the time to initiate a position? Find out in our full research report, it’s free.

Stocks We Like Even More

When Trump unveiled his aggressive tariff plan in April 2024, markets tanked as investors feared a full-blown trade war. But those who panicked and sold missed the subsequent rebound that’s already erased most losses.

Don’t let fear keep you from great opportunities and take a look at 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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