1 Cash-Producing Stock with Exciting Potential and 2 to Turn Down

A company that generates cash isn’t automatically a winner. Some businesses stockpile cash but fail to reinvest wisely, limiting their ability to expand.

Cash flow is valuable, but it’s not everything - StockStory helps you identify the companies that truly put it to work. Keeping that in mind, 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:

Wolverine Worldwide (WWW)

Trailing 12-Month Free Cash Flow Margin: 9.1%

Founded in 1883, Wolverine Worldwide (NYSE:WWW) is a global footwear company with a diverse portfolio of brands including Merrell, Hush Puppies, and Saucony.

Why Is WWW Risky?

1. Sales tumbled by 5% annually over the last five years, showing consumer trends are working against its favor
2. Earnings per share decreased by more than its revenue over the last five years, showing each sale was less profitable
3. Negative returns on capital show that some of its growth strategies have backfired

At $11.02 per share, Wolverine Worldwide trades at 8.1x forward price-to-earnings. Check out our free in-depth research report to learn more about why WWW doesn’t pass our bar.

Array (ARRY)

Trailing 12-Month Free Cash Flow Margin: 15.8%

Going public in October 2020, Array (NASDAQ:ARRY) is a global manufacturer of ground-mounting tracking systems for utility and distributed generation solar energy projects.

Why Do We Steer Clear of ARRY?

1. Declining unit sales over the past two years suggest it might have to lower prices to accelerate growth
2. Cash-burning history makes us doubt the long-term viability of its business model
3. Shrinking returns on capital from an already weak position reveal that neither previous nor ongoing investments are yielding the desired results

Array’s stock price of $4.31 implies a valuation ratio of 5.6x forward price-to-earnings. Dive into our free research report to see why there are better opportunities than ARRY.

One Stock to Watch:

Caterpillar (CAT)

Trailing 12-Month Free Cash Flow Margin: 15%

With its iconic yellow machinery working on construction sites, Caterpillar (NYSE:CAT) manufactures construction equipment like bulldozers, excavators, and parts and maintenance services.

Why Could CAT Be a Winner?

1. Operating margin improvement of 9.3 percentage points over the last five years demonstrates its ability to scale efficiently
2. Share buybacks catapulted its annual earnings per share growth to 25.7%, which outperformed its revenue gains over the last two years
3. Rising returns on capital show management is finding more attractive investment opportunities

Caterpillar is trading at $291.40 per share, or 13.6x forward price-to-earnings. Is now the time to initiate a position? Find out in our full research report, it’s free.

Stocks We Like Even More

Donald Trump’s victory in the 2024 U.S. Presidential Election sent major indices to all-time highs, but stocks have retraced as investors debate the health of the economy and the potential impact of tariffs.

While this leaves much uncertainty around 2025, a few companies are poised for long-term gains regardless of the political or macroeconomic climate, like our Top 9 Market-Beating Stocks. This is a curated list of our High Quality stocks that have generated a market-beating return of 175% over the last five years.

Stocks that made our list in 2019 include now familiar names such as Nvidia (+2,183% between December 2019 and December 2024) as well as under-the-radar businesses like Axon (+711% five-year return). Find your next big winner with StockStory today for free.