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.
Luckily for you, we built StockStory to help you separate the good from the bad. That said, here are two cash-producing companies that leverage their financial strength to beat the competition and one that may struggle to keep up.
One Stock to Sell:
Benchmark (BHE)
Trailing 12-Month Free Cash Flow Margin: 2.9%
Operating as a critical behind-the-scenes partner for complex technology products since 1979, Benchmark Electronics (NYSE: BHE) provides advanced manufacturing, engineering, and technology solutions for original equipment manufacturers across aerospace, medical, industrial, and technology sectors.
Why Do We Steer Clear of BHE?
- Sales tumbled by 5.1% annually over the last two years, showing market trends are working against its favor during this cycle
- Poor free cash flow margin of 0.9% for the last five years limits its freedom to invest in growth initiatives, execute share buybacks, or pay dividends
- Low returns on capital reflect management’s struggle to allocate funds effectively
Benchmark is trading at $42.51 per share, or 17.8x forward P/E. If you’re considering BHE for your portfolio, see our FREE research report to learn more.
Two Stocks to Watch:
monday.com (MNDY)
Trailing 12-Month Free Cash Flow Margin: 29%
With its colorful interface of boards, columns, and automation that replaced the chaos of spreadsheets, monday.com (NASDAQ: MNDY) is a cloud-based work operating system that helps teams manage projects, track tasks, and streamline workflows through customizable interfaces.
Why Are We Backing MNDY?
- ARR trends over the last year show it’s maintaining a steady flow of long-term contracts that contribute positively to its revenue predictability
- Software is difficult to replicate at scale and leads to a best-in-class gross margin of 89.2%
- Robust free cash flow margin of 29% gives it many options for capital deployment
At $152.57 per share, monday.com trades at 5.6x forward price-to-sales. Is now a good time to buy? See for yourself in our comprehensive research report, it’s free for active Edge members .
AZZ (AZZ)
Trailing 12-Month Free Cash Flow Margin: 25.5%
Responsible for projects like nuclear facilities, AZZ (NYSE: AZZ) is a provider of metal coating and power infrastructure solutions.
Why Are We Positive On AZZ?
- Healthy operating margin of 15% shows it’s a well-run company with efficient processes, and its rise over the last five years was fueled by some leverage on its fixed costs
- Performance over the past two years shows its incremental sales were extremely profitable, as its annual earnings per share growth of 26% outpaced its revenue gains
- Free cash flow margin grew by 23 percentage points over the last five years, giving the company more chips to play with
AZZ’s stock price of $98.76 implies a valuation ratio of 16x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free for active Edge members.
Stocks We Like Even More
If your portfolio success hinges on just 4 stocks, your wealth is built on fragile ground. You have a small window to secure high-quality assets before the market widens and these prices disappear.
Don’t wait for the next volatility shock. Check 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 244% over the last five years (as of June 30, 2025).
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 Kadant (+351% 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
StockStory is growing and hiring equity analyst and marketing roles. Are you a 0 to 1 builder passionate about the markets and AI? See the open roles here.
