2 Cash-Producing Stocks with Exciting Potential and 1 We Ignore

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. That said, here are two cash-producing companies that excel at turning cash into shareholder value and one that may face some trouble.

One Stock to Sell:

Academy Sports (ASO)

Trailing 12-Month Free Cash Flow Margin: 3.2%

Founded in 1938 as a tire shop before expanding into fishing equipment, Academy Sports & Outdoor (NASDAQ:ASO) sells a broad selection of sporting goods but is still known for its outdoor activity merchandise.

Why Is ASO Not Exciting?

1. Annual revenue declines of 2.4% over the last three years indicate problems with its market positioning
2. Lagging same-store sales over the past two years suggest it might have to change its pricing and marketing strategy to stimulate demand
3. 3.9 percentage point decline in its free cash flow margin over the last year reflects the company’s increased investments to defend its market position

Academy Sports’s stock price of $58.61 implies a valuation ratio of 9x forward P/E. Read our free research report to see why you should think twice about including ASO in your portfolio.

Two Stocks to Watch:

AZZ (AZZ)

Trailing 12-Month Free Cash Flow Margin: 26.5%

Responsible for projects like nuclear facilities, AZZ (NYSE:AZZ) is a provider of metal coating and power infrastructure solutions.

Why Are We Bullish on AZZ?

1. Annual revenue growth of 12.7% over the last five years was superb and indicates its market share increased during this cycle
2. Incremental sales over the last two years have been highly profitable as its earnings per share increased by 22.3% annually, topping its revenue gains
3. Free cash flow margin grew by 25.1 percentage points over the last five years, giving the company more chips to play with

At $137.45 per share, AZZ trades at 20.6x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free.

Northwest Pipe (NWPX)

Trailing 12-Month Free Cash Flow Margin: 9.3%

Playing a large role in the Integrated Pipeline (IPL) project in Texas to deliver ~350 million gallons of water per day, Northwest Pipe (NASDAQ:NWPX) is a manufacturer of pipeline systems for water infrastructure.

Why Could NWPX Be a Winner?

1. Annual revenue growth of 12.5% over the past five years was outstanding, reflecting market share gains this cycle
2. Share repurchases have amplified shareholder returns as its annual earnings per share growth of 19.9% exceeded its revenue gains over the last two years
3. Free cash flow margin increased by 13.7 percentage points over the last five years, giving the company more capital to invest or return to shareholders

Northwest Pipe is trading at $75.31 per share, or 20.2x forward P/E. Is now a good time to buy? See for yourself in our comprehensive research report, it’s free.

High-Quality Stocks for All Market Conditions

The market’s up big this year - but there’s a catch. Just 4 stocks account for half the S&P 500’s entire gain. That kind of concentration makes investors nervous, and for good reason. While everyone piles into the same crowded names, smart investors are hunting quality where no one’s looking - and paying a fraction of the price. Check out the high-quality names we’ve flagged in our 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 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.