1 Cash-Producing Stock for Long-Term Investors and 2 Facing Headwinds

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.

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:

Matrix Service (MTRX)

Trailing 12-Month Free Cash Flow Margin: 15.8%

Founded in Oklahoma, Matrix Service (NASDAQ:MTRX) provides engineering, fabrication, construction, and maintenance services primarily to the energy and industrial markets.

Why Does MTRX Worry Us?

1. Customers postponed purchases of its products and services this cycle as its revenue declined by 10.7% annually over the last five years
2. Gross margin of 4.2% reflects its high production costs
3. Performance over the past five years was negatively impacted by new share issuances as its earnings per share dropped by 29.7% annually, worse than its revenue

Matrix Service is trading at $16.05 per share, or 20.9x forward P/E. To fully understand why you should be careful with MTRX, check out our full research report (it’s free).

Merit Medical Systems (MMSI)

Trailing 12-Month Free Cash Flow Margin: 13.4%

Founded in 1987 and now offering over 1,700 patented products across global markets, Merit Medical Systems (NASDAQ:MMSI) manufactures and markets specialized medical devices used in minimally invasive procedures for cardiology, radiology, oncology, critical care, and endoscopy.

Why Is MMSI Not Exciting?

1. Smaller revenue base of $1.43 billion means it hasn’t achieved the economies of scale that some industry juggernauts enjoy
2. Underwhelming 4.5% return on capital reflects management’s difficulties in finding profitable growth opportunities

Merit Medical Systems’s stock price of $90.05 implies a valuation ratio of 26.1x forward P/E. If you’re considering MMSI for your portfolio, see our FREE research report to learn more.

One Stock to Buy:

Texas Roadhouse (TXRH)

Trailing 12-Month Free Cash Flow Margin: 6.6%

With locations often featuring Western-inspired decor, Texas Roadhouse (NASDAQ:TXRH) is an American restaurant chain specializing in Southern-style cuisine and steaks.

Why Are We Backing TXRH?

1. Aggressive strategy of rolling out new restaurants to gobble up whitespace is prudent given its same-store sales growth
2. Average same-store sales growth of 7.5% over the past two years indicates its restaurants are resonating with diners
3. ROIC punches in at 20.7%, illustrating management’s expertise in identifying profitable investments

At $172.74 per share, Texas Roadhouse trades at 24.1x forward P/E. Is now a good 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 2025, 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 Growth Stocks for this month. 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-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

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