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. That said, here is one cash-producing company that reinvests wisely to drive long-term success and two best left off your watchlist.
Two Industrials Stocks to Sell:
Tennant (TNC)
Trailing 12-Month Free Cash Flow Margin: 3.6%
As the world’s largest manufacturer of autonomous mobile robots, Tennant (NYSE: TNC) designs, manufactures, and sells cleaning products to various sectors.
Why Are We Out on TNC?
- Annual sales declines of 1.6% for the past two years show its products and services struggled to connect with the market during this cycle
- Sales were less profitable over the last two years as its earnings per share fell by 16.8% annually, worse than its revenue declines
- Waning returns on capital imply its previous profit engines are losing steam
At $69.84 per share, Tennant trades at 14x forward P/E. Dive into our free research report to see why there are better opportunities than TNC.
MasTec (MTZ)
Trailing 12-Month Free Cash Flow Margin: 2%
Involved in the 1996 Olympic Games MasTec (NYSE: MTZ) is an infrastructure construction company that specializes in the telecommunications, energy, and utility industries.
Why Does MTZ Fall Short?
- Competitive supply chain dynamics and steep production costs are reflected in its low gross margin of 12.7%
- Operating margin of 3% falls short of the industry average, and the smaller profit dollars make it harder to react to unexpected market developments
- 5.8 percentage point decline in its free cash flow margin over the last five years reflects the company’s increased investments to defend its market position
MasTec is trading at $342.97 per share, or 39.6x forward P/E. To fully understand why you should be careful with MTZ, check out our full research report (it’s free).
One Industrials Stock to Buy:
ESCO (ESE)
Trailing 12-Month Free Cash Flow Margin: 19.9%
A developer of the communication systems used in the Batmobile of “The Dark Knight,” ESCO (NYSE: ESE) is a provider of engineered components for the aerospace, defense, and utility sectors.
Why Will ESE Beat the Market?
- Annual revenue growth of 11.5% over the past two years was outstanding, reflecting market share gains this cycle
- Incremental sales significantly boosted profitability as its annual earnings per share growth of 36.3% over the last two years outstripped its revenue performance
- Free cash flow margin grew by 10.9 percentage points over the last five years, giving the company more chips to play with
ESCO’s stock price of $292.28 implies a valuation ratio of 35.2x forward P/E. Is now the time to initiate a position? Find out in our full research report, it’s free.
Stocks We Like Even More
ONE MORE THING: Top 6 Stocks for This Week. This market is separating quality stocks from expensive ones fast. AI taking down whole sectors with no warning. In a rotation this fast, you need more than a list of good companies.
Our AI system flagged Palantir before it ran 1,662%. AppLovin before it ran 753%. Nvidia before it ran 1,178%. Each week it produces 6 new names that pass the same tests. Get Our Top 6 Stocks for Free HERE.
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,326% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today.
