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 leverages its financial strength to beat its competitors and two that may face some trouble.

Two Stocks to Sell:

NXP Semiconductors (NXPI)

Trailing 12-Month Free Cash Flow Margin: 16.3%

Spun off from Dutch electronics giant Philips in 2006, NXP Semiconductors (NASDAQ: NXPI) is a designer and manufacturer of chips used in autos, industrial manufacturing, mobile devices, and communications infrastructure.

Why Are We Wary of NXPI?

1. Products and services are facing significant end-market challenges during this cycle as sales have declined by 4.1% annually over the last two years
2. Estimated sales growth of 5.2% for the next 12 months is soft and implies weaker demand
3. Free cash flow margin dropped by 8.4 percentage points over the last five years, implying the company became more capital intensive as competition picked up

NXP Semiconductors is trading at $216.98 per share, or 18.2x forward P/E. Dive into our free research report to see why there are better opportunities than NXPI.

Rush Enterprises (RUSHA)

Trailing 12-Month Free Cash Flow Margin: 9.9%

Headquartered in Texas, Rush Enterprises (NASDAQ: RUSH.A) provides truck-related services and solutions, including sales, leasing, parts, and maintenance for commercial vehicles.

Why Do We Avoid RUSHA?

1. Sales trends were unexciting over the last two years as its 2.2% annual growth was below the typical industrials company
2. Sales are projected to tank by 1.5% over the next 12 months as demand evaporates
3. Earnings per share have contracted by 10% annually over the last two years, a headwind for returns as stock prices often echo long-term EPS performance

Rush Enterprises’s stock price of $52.75 implies a valuation ratio of 8.4x forward EV-to-EBITDA. If you’re considering RUSHA for your portfolio, see our FREE research report to learn more.

One Stock to Watch:

Powell (POWL)

Trailing 12-Month Free Cash Flow Margin: 4.7%

Originally a metal-working shop supporting local petrochemical facilities, Powell (NYSE: POWL) has grown from a small Houston manufacturer to a global provider of electrical systems.

Why Do We Like POWL?

1. Market share has increased this cycle as its 34.8% annual revenue growth over the last two years was exceptional
2. Operating profits and efficiency rose over the last five years as it benefited from some fixed cost leverage
3. Earnings per share have massively outperformed its peers over the last two years, increasing by 209% annually

At $222.30 per share, Powell trades at 15x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free.

High-Quality Stocks for All Market Conditions

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 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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